The Monetary Policy Committee is due to begin its two-day meeting on the economy on Monday (today) amid the economic crisis fuelled by the Naira redesign policy and fuel scarcity.

Analysts in the country have said the Central Bank of Nigeria and the MPC may not raise the lending rates at the end of the Monetary Policy Committee.

Although the CBN Governor and Chairman of the MPC, Godwin Emefiele, has said it is unhealthy for the economy to have an inflation rate that is significantly higher than the Monetary Policy Rate. However, analysts said the MPC might not raise the lending rate again, having done so in its previous meetings. The CBN had disclosed on its website that it will hold its 290th MPC meeting on Monday (today) and Tuesday.

At the last MPC meeting in January, the committee voted to raise the MPR by 100 basis points to 17.5 per cent; retain the asymmetric corridor of +100/-700 basis points around the MPR; retain the CRR at 32.5 per cent; and retain the liquidity ratio at 30 per cent.

A former President, Association of  National Accountants of Nigeria, Dr Sam Nzekwe, said, “With what happened from January till now, it is as if everything has been at a standstill, the economy has not been moving at all because there has been no cash among others. I do not think they are going to make any changes because there is no basis to change anything. The only thing they need to do is how to bring liquidity into the system for people to have money to commence their activities because it is like restarting the economy.”

Also, the Managing Director of the Cowry Assets Management Limited, Mr Johnson Chukwu, said the CBN might retain the MPR, considering the fact that it did so in its January meeting. According to analysts at Greenwich Merchant Bank, at the MPC meeting, “It is expected that the committee’s hawkish stance will continue, given its resolution to restore price stability. However, the committee members will be wary of current events in the United States’ financial sector due to the recent collapse of Silicon Valley Bank and Moody’s downgrade of the US banking system.”

Analysts at Cordros Research stated that “Looking ahead, we believe investors will focus on the outcomes of the bond auction and the MPC meeting scheduled to hold next week to gain further clarity on the movement of yields in the fixed-income market.

“If the MPC increases the benchmark policy rate and there is a pass through impact on yields in the fixed income market, there could be a realignment of investments between markets that would pressure the performance of the equities market. As a result, we expect cautious trading from domestic investors in the short term. Overall, we reiterate the need for positioning in only fundamentally sound stocks as the uninspiring macro story remains a significant headwind for corporate earnings.”






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