There is apprehension in the economic circles over the direction of monetary policies as the Central Bank of Nigeria (CBN) at the today begins a two-day meeting to review the economy and decide on exigent monetary policies in view of global and national outlooks.
Investment bankers, financiers, investors, business owners and research and advisory experts agreed yesterday that the decisions of the apex bank’s Monetary Policy Committee (MPC) will have a significant influence on the general economic outlook, including the flows of investments between the fixed and non-fixed security markets.
But experts differed on the possible headline decision by the apex bank. While the majority feel that the time is ripe for the CBN to abandon its long-running dove stance and hike the Monetary Policy Rate (MPR), many experts said the bank may opt to retain the rate, its classical policy view in the recent period. The MPR has been unchanged at 11.50 per cent since September 2020.
Financial Derivatives Company (FDC), headed by Bismarck Rewane, a member of President Muhammadu Buhari’s Presidential Economic Advisory Council (PEAC), said there was “no more room for the MPC to wiggle” with the continuing high inflationary trend.
The National Bureau of Statistics (NBS) last week released its latest inflation report, showing that consumer price inflation rose for the third consecutive month to 16.82 per cent in April 2022, the highest level in eight months.
While there was almost consensus by analysts on inflation increase, the slope of the curve was steeper than expected, some 50 basis points above the average projection and 72 basis points above the International Monetary Fund (IMF)’s 2022 country projection of 16.1 per cent.
According to the FDC, the unrelenting rise in inflation supports the argument for a rate hike.
Afrinvest (West Africa) said elevated external pressure and weak domestic buffer have paved the way for a possible rate hike, citing the continuing inflation trend.
Former President of Chartered Institute of Stockbrokers (CIS) and Managing Director, Arthur Stevens Asset Management Limited, Mr Olatunde Amolegbe, said rate retention appeared to be unsustainable in the light of current economic realities.
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