Home Banking & Finance CBN may increase loan rate as MPC meet amid economic crisis

CBN may increase loan rate as MPC meet amid economic crisis

cargo-lagospost.ng
Advertisement

The Monetary Policy Committee, MPC, will begin its two-day meeting on the economy on Monday (today) amid the economic crisis caused by the naira redesign policy and fuel scarcity.

Central Bank of Nigeria, CBN Governor and Chairman of the MPC, Godwin Emefiele, had noted that it is unhealthy for the economy to have an inflation rate that is significantly higher than the Monetary Policy Rate.

However, analysts said the MPC might not raise the lending rate again, having done so in its previous meetings.

The CBN had disclosed on its website that it will hold its 290th MPC meeting on Monday (today) and Tuesday.

The committee at the last MPC meeting in January voted to raise the MPR by 100 basis points to 17.5 per cent; retain the asymmetric corridor of +100/-700 basis points around the MPR; retain the CRR at 32.5 per cent; and retain the liquidity ratio at 30 per cent.

Speaking on the issue, a former President of the Association of National Accountants of Nigeria, Dr Sam Nzekwe, said, “With what happened from January till now, it is as if everything has been at a standstill, the economy has not been moving at all because there has been no cash among others. I don’t think they are going to make any changes because there is no basis to change anything.

“The only thing they need to do is how to bring liquidity into the system for people to have money to commence their activities because it is like restarting the economy.”

While analysts at Cordros Research believe the MPC will focus more on bond auctions rather than lending rates. They said; “Looking ahead, we believe investors will focus on the outcomes of the bond auction and the MPC meeting scheduled to hold next week to gain further clarity on the movement of yields in the fixed-income market.

“If the MPC increases the benchmark policy rate and there is a passthrough impact on yields in the fixed income market, there could be a realignment of investments between markets that would pressure the performance of the equities market.

“As a result, we expect cautious trading from domestic investors in the short term. Overall, we reiterate the need for positioning in only fundamentally sound stocks as the uninspiring macro story remains a significant headwind for corporate earnings.”

Advertisement

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.