IN spite of the two months consecutive decline in inflation rate, improved stability of the exchange rate and decline interest rate on fixed income instruments, the Monetary Policy Committee, MPC, of the Central Bank of Nigeria, CBN, is expected to retain the Monetary Policy Rate, MPR, and other benchmark rates at same level at the end of its 266th meeting holding today and tomorrow.
At its last meeting in January, the MPC retained the MPR at 14 percent for the 15th time since July 2016. The committee also retained the asymmetric corridor of +200/-500 basis points around the MPR; the Cash Reserve Ratio, CRR, at 22.5 per cent; and the Liquidity Ratio at 30 per cent. The decision of the MPC is usually hinged on the need to checkmate the inflation rate and enhance exchange rate stability, which have recorded modest improvements in the last two months.
Exchange rate stability From 12.10 percent in December 2018, inflation declined to 11.8 percent in January and further to 11.56 percent in February, while the naira appreciated in the I&E window to N360.43 per dollar last week from N364 per dollar at the end of December. Also yields on 364-Day treasury bills fell by 214 basis points to 12.86 percent last week from 15 percent in January. Financial market analysts, however, projected that the MPC members will not be swayed by these improvements to make a decision to lower the MPR. Vanguard
Pix: CBN Governor, Godwin Emefiele
