The Central Bank Monetary Policy Committee is meeting on Monday and Tuesday, 19th and 20th September 2016 to deliberate on whether to increase, decrease or maintain the monetary policy rates (MPR).
Analysts, expect rates to be maintained despite a rise in inflation rate to 17.6% compared to 16.5% the last time the committee met. At the time, the CBN had pursued a hawkish monetary policy raising rates by as much as 200 basis points alluding to the need to attract foreign portfolio investors.
However, the Minister for Finance, Madam Kemi Adeosun, who is currently courting foreign investors with a planned $1 billion Eurobond Offering is asking that rate be dropped.
According to reuters, the finance minister wants the central bank to lower interest rates so that the government can borrow domestically to boost an economy dogged by a recession without increasing its debt servicing costs.
Adeosun said she wanted the central bank to reconsider a hike to interest rates which it announced at its last meeting in July, to help support the naira and attract foreign inflows in bond and equity markets.
Analysts believe this is a subtle message to the CBN informing them of where are interest lies in terms of fiscal policy. It also further buttresses the suggestion that there is a mismatch between between fiscal and monetary policy, a situation many blame for the worsening economic situation.
The MPC is set to announce their decision tomorrow and will be keenly watched by analysts as whatever decision the CBN takes will have potential consequences for the economy.
