Analyst sees CBN MPC maintaining status quo on key lending rates

With Headline Inflation still above the MPR, members of the CBN MPC would likely be sticking to status quo
A vote to Hold rates this time would be in line with consensus expectation so markets might not react
Analyst see moderation in year on year inflation to 13.4% in March from 14.3% percent in February 2018 if disinflation trend continues

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Ahead of the outcome of the Central Bank of Nigeria (CBN) Monetary Policy Committee meeting tomorrow, April 4, 2018, an analyst has predicted a 'do nothing' to the key lending rates.

The Monetary Policy Committee of the CBN kicked off two-day statutory meeting in Abuja on Tuesday to make a decision on the monetary aspect of the economy.

Omotola Abimbola, a Research Analyst at Afrinvest West Africa told Business Insider Sub Sahara Africa on Tuesday, April 3, 2018, that despite the disinclinations experienced in the past one year, the CBN MPC will keep the current interest and other rates on hold.

“Despite the disinclination experienced in the past one year, we do not expect a rate cut at the MPC meeting. It would be the first meeting 5 of the members would be attending and thus might not be inclined to Vote for changes yet.

“Also, the CBN Governor has also repeatedly guided that Inflation development will be the major anchor of policymaking, and with Headline Inflation still above the MPR, that suggests members would likely be sticking to status quo

“A vote to Hold now would be in line with consensus expectation so markets might not react.

“However, MPR cut is a matter of when not if, hence investors would be looking out for the CBN Governors Questions and Answers session for hints as to when the rate cut would happen,” Abimbola said.

The Committee had held the key lending rates constant for the past one year to support the naira and curb inflations.

The Monetary Policy Rate (MPR) at 14%; CRR at 22.5%; Liquidity Ratio at 30% and the Asymmetric Corridor at +200 and -500 basis points around the MPR.

Godwin Emefiele, CBN governor had hinted at the 2017 annual bankers’ dinner organised by the Chartered Institute of Bankers of Nigeria (CIBN) that the monetary policy committee may lower interest rate in 2018 if the pace of disinflation becomes adequate.

Nigeria's inflation slowed for a 13th consecutive month in February to 14.3% while dollar reserves rose to $46.2 billion in March gaining over 8% within a month, all thanks to debt sales by the central government.

Abimbola further hinted that they expect the disinflation trend to continue in the near term, estimating a further moderation in year on year inflation to 13.4% in March from 14.3% percent in February 2018.

Analyst sees CBN MPC maintaining status quo on key lending rates

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