Another rate hike looms in Nigeria as the central bank is poised to raise its benchmark interest rate by at least 100 basis points targeted at taming inflation, which has risen to 33.69 percent, breaking the record.
For the Central Bank of Egypt, interest rates might be held steady as inflationary pressures cool in the North African nation.
Q: “Since Cardoso assumed his position last September, he has raised the government’s lending rate twice by a combined 600 basis points.”
Meanwhile, United Bank for Africa (UBA) Plc and First City Monument Bank (FCMB) will be holding their annual general meeting this week.
Read also: FG to sell 3-year savings bond at higher interest rate of 18.04%
Monday, May 20:
MPC to hold its 295th meeting with rate hikes in focus
The Central Bank of Nigeria’s Monetary Policy Committee (MPC) will sit on Monday and Tuesday in a meeting that may result in another rate hike.
The MPC meeting, led by Olayemi Cardoso, CBN governor, is the highest policy-making committee of the bank, set up to review economic and financial conditions and determine the appropriate policy in the short to medium term.
Analysts have predicted that the MPC is likely to raise interest rates, otherwise known as the monetary policy rate (MPR), by at least 100 basis points in a renewed effort to tame inflation and calm the FX market.
Since Cardoso assumed his position last September, he has raised the government’s lending rate twice by a combined 600 basis points.
The MPR went from 18.75 percent last July to 24.75 percent at the last MPC meeting in March.
Cardoso, in a recent interview with the Financial Times, hinted at the intention of the bank to further keep interest rates high until inflation subsides by implementing orthodox policies.
Some analysts have cautioned that while a rate hike is necessary given the record high inflation of 33.69 percent in April, governments may face higher interest payments on their existing debt and may need to pay more to borrow money in the future, potentially leading to higher budget deficits.
NBS to release April’s diesel price watch
The National Bureau of Statistics will release the average retail price for diesel for April on Monday.
The average retail price of automotive gas oil (diesel) paid by consumers increased by 59.51 percent on a year-on-year basis.
It rose from a lower cost of N840.81 per litre recorded in the corresponding month of last year (i.e., March 2023) to a higher cost of N1341.16 per litre in March 2024.
On a month-on-month basis, an increase of 6.69 percent was recorded from N1257.06 in the preceding month of February 2024 to an average of N1341.16 in March 2024.
With improved production from the Dangote refinery, the world’s largest single-train facility, the price of diesel is expected to crash to about N900 per litre.
Wednesday, May 23:
Egypt’s MPC to make decisions on interest rates
The Central Bank of Egypt’s monetary committee is expected to hold interest rate decisions on Wednesday.
In March, the CBE hiked its monetary policy rate by a record 600 basis points, its biggest rate hike yet.
Analysts expect the Middle East’s largest population to hold rates steady as the country’s inflation slows for a second month.
The urban consumer price inflation rate decreased to 32.5 percent in April from 33.3 percent recorded in March on the back of the availability of foreign exchange.
NBS to release food price watch for April
The National Bureau of Statistics will release selected food prices for April 2024 on Wednesday.
The food inflation rate rose from 40.01 percent in March to 40.53 percent in April, lower than some analysts had predicted.
The surge in food prices is forcing consumption of staples out of the reach of many, leading to a pronounced rise in the cost of living crisis.
The key drivers of this inflationary pressure include notable price hikes in essential food commodities such as garri, bread, cereals, local rice, potatoes, yams, and other tubers.
The top 10 food items that have recorded the highest price increase in one year as of March 2024, according to the selected food price report of the NBS, were beef, rice, beans, onion, white garri, yam, semovita, flour, and bread.
Thursday, May 24:
FCMB to hold its annual general meeting
First City Monument Bank will be holding its annual general meeting on Thursday.
Recently, FCMB announced its plan to raise an additional N150 billion through the issuance of new securities.
FCMB currently has N125.29 billion, and based on its unaudited full-year 2023 financial results, it will need over N370 billion to meet the N500 billion mark as they also operate internationally.
“FCMB’s plan to raise an additional N150 billion through the issuance of securities comprising ordinary shares and preference shares would suggest that it is opting to downgrade its licence from international to national.
“Based on current capital, FCMB would need at least N375 billion to maintain its international licence,” a financial analyst and keen observer of the bank recapitalization process told BusinessDay.
However, it requires only N75 billion to meet the N200 billion required for a national licence. The financial analyst told BusinessDay that FCMB may possibly later on merge with another “to meet the N500 billion capital to be or maintain an international licence.”
UBA PLC holds an annual general meeting.
United Bank of Africa PLC will be holding its 62nd Annual General Meeting (AGM) on Friday, May 24, 2024, at the Transcorp Hilton Hotel, Abuja.
The authorisation for the board to raise capital will be presented for discussion and vote at the next meeting.
The bank intends to do this through the issuance of securities comprising ordinary shares, preference shares, convertible and/or non-convertible notes, bonds, or any other instruments in the Nigerian and/or international capital markets.
Some other items will also be on the agenda for discussion and action at the upcoming AGM: the declaration of the final dividend and the re-election of the following directors, retiring by rotation: Caroline Anyanwu, Aisha Hassan-Baba, and Erelu Angela Adebayo.
Conversations on the following will also be discussed: to authorise the directors to fix the remuneration of the auditors for the 2024 financial year and to disclose the remuneration of bank managers. 6. To elect members of the Statutory Audit Committee.
Naira heads to 1,600 per USD
Nigeria’s naira is racing again to N1,600 per US dollar, as the currency slumped to N1,533.99 as of Thursday in the official market.
The naira has reversed its recent gains in March, slipping from the top currency to the worst performing in the world in April.
The currency depreciation followed a shortage of the US currency as the dollar supplied by willing sellers and willing buyers declined by 5.63 percent to $272.86 million on Thursday.
On the street, the dollar was quoted at N1,545, posing constraints on the use of the greenback for those who are in need of it.
The market, however, awaits the rate decisions by the MPC today and Tuesday to restore investors’s confidence and ensure relative stability in the foreign exchange.
