The Monetary Policy Committee (MPC) will be meeting on the 21st & 22nd of September to deliberate on the current state of the Nigerian economy, and determine policy directions on key monetary variables. In our view, key considerations for the committee will include amongst others, declining oil prices, general price level, external reserves position and the effects of the tightening of the monetary policies thus far on the Nigerian economy.
We expect the Apex Bank to consider among other things, JP Morgan’s decision to phase out Nigeria from its Government Bond Index for Emerging Markets (GBI-EM), while also considering the country’s FX trading system in the light of this, and the implications of the Treasury Single Account (TSA) on Nigerian deposit money banks and the economy,.
Also, we anticipate that there will be deliberations on Iran’s potential contribution to global oil supply, following on from expectations of a nuclear deal being reached, and the impact of this on global crude oil prices and the Nigerian economy, while also considering general financial market apathy.
Based on our analyses, we expect the MPC to retain MPR at 13% and reduce the cash reserve ratio (CRR) to 20% following the implementation of the Treasury Single Account initiative.
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