The newly constituted Monetary Policy Committee (MPC) will most likely increase the Monetary Policy Rate at its meeting scheduled for Monday and Tuesday, analysts at Meristem research have projected.
According to Meristem’s macroeconomics report, the analysts said that the MPC will be focused on deliberating on several issues which include assessing the disinflation trends observed in advanced economies and monitoring the measures implemented by global monetary authorities.
The MPC will be meeting for the first time since the CBN governor, Olayemi Cardoso, assumed office last October.
During its last meeting held in July 2023, the committee pegged the benchmark interest rate at 18.75 percent.
“During the upcoming meeting, we anticipate that the Monetary Policy Committee will focus on several key considerations. These include evaluating the disinflation trends observed in advanced economies and monitoring the measures implemented by global monetary authorities,” the report stated.
The analysts added that the persistent rise in the country’s headline inflation, attributed to escalating food prices and the fall of the naira, continued to pose a major concern for the committee.
“Furthermore, factors such as money supply and the continuous free fall of the naira are expected to influence the committee’s deliberations.
“Considering the sustained inflationary pressures and the anticipation of a continued uptrend, we foresee the Committee raising the policy rate by 100bps to 19.75 percent. Moreover, we anticipate an increase in the Cash Reserve Ratio by 250bps to 35.00 percent, with other policy parameters remaining unchanged.
“Additionally, considering the necessity of aligning the monetary policy rate with prevailing market interest rates, we opine that a ‘hold’ stance is unlikely,” the analysts said.
Latest data from the National Bureau of Statistics revealed that Nigeria’s headline inflation jumped to 29.9 percent in January, from 28.92 percent last December.
Meanwhile, Africa’s largest economy witnessed a 3.46 percent economic growth in the fourth quarter of 2023.
The Senate had on Wednesday screened the nominated members of the Monetary Policy Committee of the Central Bank of Nigeria, which was forwarded by President Bola Tinubu last week.
The committee members were questioned on the lingering foreign exchange and food crises and how they intend to swiftly combat them.
On Thursday, the Senate confirmed Cardoso as the MPC chairman, alongside Muhammad Sani Abdullahi, Bala Bello, Emem Usoro, Philip Ikeazor and the director general of the Securities and Exchange Commission, Lamido Yuguda as members of the MPC.
