Financial experts have expressed varying opinions on the possible outcomes of the rates ahead of the Central Bank of Nigeria’s two-day Monetary Policy Committee meeting, which begins on Monday (today).Information Guide Nigeria
The CBN announced that its 289th meeting would be held in Abuja.
Experts and researchers at Cordros Securities predict a rate hike following the meeting, stating that the MPC will “prefer smaller rate hikes in the short term.”
In a report, they stated, “Elsewhere, the prospect of global central banks embarking on smaller interest rate hikes could also influence the MPC’s decision to toe the same line amid concerns about the domestic economy.
Thus, we expect the MPC to opt for smaller rate hikes in the short-term, given the build-up of pressures in the local economy and as the risks of over-tightening come to the forefront of policy discussions. Consequently, we expect the committee to increase the MPR further by 50bps – 100bps and retain other policy parameters.”JAMB portal
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It added, “Therefore, we expect the committee to assess the domestic and global economic environment in the context of developing key economic and financial indicators since its last policy meeting in November. In our view, the MPC is likely to be concerned about the pressure on the domestic economy, given the slow growth recorded in Q3, 22022, more so that the manufacturing sector posted its first contraction since Q4, 2020.
“Moreover, inflationary pressures remain intact, although the slight ease in December will likely be welcomed among the committee members.”
However, Prof Uche Uwaleke, a Capital Markets professor and Chairman of the Chartered Institute of Bankers of Nigeria, Abuja Branch, believes the MPC will maintain all monetary policy parameters when it meets this week.NYSC portal
He gave two reasons for this:
He said, “One, historical evidence suggests that the MPC rarely adjusts policy rates in January due to the need to allow the markets to stabilise in the New Year.
“Secondly, inflationary pressure is beginning to reduce as seen in headline inflation numbers for the month of December 2022 not only in Nigeria but also in the US.
“I do not advise a further hike in MPR, as doing so beyond the current high rate of 16.5 per cent is capable of jeopardising economic growth.”JAMB Result
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