FSDH Expects CBN to Hold Rates at 14% after MPC Meeting

By Modupe Gbadeyanka/FSDH Research

The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has entered its day two, which is the last day and after the meeting, the CBN Governor, Mr Godwin Emefiele, is expected to address the media on outcome of their deliberations.

But ahead of that, FSDH Research has disclosed that it expects the committee to hold the rates at the current levels of 14 percent.

In the past, there have been calls for reduction in the rates, including from the Minister of Finance, Mrs Kemi Adeosun and the Manufacturers Association of Nigeria (NAN), but the CBN had remained adamant, arguing that such move would be counterproductive.

Although the current growth rates in monetary aggregates are below CBN’s targets (which should justify an expansionary monetary policy), more stability in the foreign exchange market and lower inflation rate are necessary conditions for a policy change.

At its March 2017 meeting, the MPC maintained the Monetary Policy Rate (MPR) at 14 percent, with the asymmetric corridor at +200 and -700 basis points; retained the Cash Reserve Requirement (CRR) and Liquidity Ratio (LR) at 22.50% and 30% respectively.