MPC Meeting: Analysts Expect CBN to Raise Interest Rate to 19.75%

By Aduragbemi Omiyale

The anchor interest rate, which is the Monetary Policy Rate (MPR), should be raised by 100 basis points to 19.75 per cent by the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN).

This is the view of analysts at Meristem Research in a report obtained by Business Post ahead of the rate-setting announcement on Tuesday, February 27, 2024.

The committee is commencing its two-day meeting today, Monday, February 26, and will announce the outcome of their deliberations tomorrow.

The group last met in July 2023. It would be the first under the current Governor of the central bank, Mr Yemi Cardoso, who was confirmed as the chairman of the team by the Senate last week.

Mr Cardoso, a former banker, was appointed as the substantive CBN chief in September 2023 and took over from Mr Folashodun Shonubi, who was appointed as the bank’s acting governor after Mr Godwin Emefiele was suspended from office in June 2023 by President Bola Tinubu some days after he (Mr Tinubu) assumed office.

Mr Cardoso missed the MPC meeting for September and November.

In a recent interview, he disclosed that the team was taking its time to hold another meeting because it wants a situation where the outcomes of the committee would carry much weight.

As the MPC meeting starts today, Meristem Research has predicted that the rate would go up “considering the sustained inflationary pressures and the anticipation of a continued uptrend.”

It also expects “an increase in the Cash Reserve Ratio (CRR) by 250 basis points to 35.00 per cent, 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,” it stated.

On February 15, 2024, the National Bureau of Statistics (NBS) revealed that inflation in January 2024 rose by 29.90 per cent on a year-on-year basis, its highest in 28 years, as a result of a hike in the prices of goods and services in the country.