MPR: What The Predictors Think Will Happen

Chacha Wabara March 20, 2017

Nairametrics| Financial experts are predicting that the Monetary Policy Committee of the Central Bank of Nigeria (CBN) is unlikely to change any of the key rates after its 2-day meeting which commenced this morning. Some of these predictions are quoted below.

Bismarck Rewane, Chief Executive Officer, Financial Derivatives Company Limited.

My projection is that they will do nothing; they will just wait and see. If I was there, I would get the interest rate down by one per cent, bring the CRR down by two per cent and putting more money into the foreign exchange market. That will be a major catalyst for economic activities. However, I think the prudent and safe thing that we should expect is that there will be no change for now. Bringing down interest rate has a risk element.-

Johnson Chukwu, Chief Executive Officer, Cowry Asset Management Limited.

I don’t expect the MPC to adjust the rates because the monetary authority will not want to inject naira liquidity into the economy at this point when they are succeeding in stabilising the naira exchange rate. I do not expect the monetary authority to react to the decline in inflation in February at this particular meeting. That, we expect, will happen probably at the May meeting when inflation would have gone down further and at that point, the naira exchange rate would have been better stabilised.-

Also on Smooth FM this morning, ARM predicted that rate will remain at 14% and did not see any need for a rate hike or a drop.

If these predictions turn out to be correct, it would be similar to the outcome of the January meeting where the Monetary Policy Rate (benchmark interest rate), Cash Reserves Ratio and Liquidity Ratio were retained at 14 per cent, 22.5 per cent and 30 per cent, respectively.

Whatever the outcome though, we expect that it would be agreeable to both monetary and fiscal policy makers, who have just concluded a meeting over harmonization of economic policies. The meeting was attended by economic management leaders from the CBN and the Ministries of Finance, Budget and National Planning as well as Industry, Trade and Investment. This was in an effort to prevent contradictory actions that could stagnate the economic revival of the country.