Economists list expectations ahead MPC meeting

As the Central Bank of Nigeria (CBN) prepares to hold its last Monetary Policy Committee (MPC) meeting in 2019, experts have urged the apex bank to maintain the current Monetary Policy Rate (MPR) and other parameters.

The experts told the News Agency of Nigeria (NAN) on Wednesday in Lagos that maintaining the MPR alongside other policy parameters would help to tame inflationary pressures.

The next MPC meeting — the last for the year — is scheduled for Nov. 25 and Nov. 26.

Recall that the CBN had, since March 2019, held the MPR at 13.5 per cent alongside other monetary policy parameters.

The Director, Centre for Economic Policy Analysis and Research (CEPAR), University of Lagos, Prof. Ndubisi Nwokoma, urged the committee to use the MPR to stop the increasing direction of inflation occasioned by border closure.

“The Central Bank should do what it can to arrest the rising case of inflation that is occasioned by border closure.

“I will advise that the committee maintains the Monetary Policy Rate which is at 13.5 percent, or even go to 14 per cent if possible,’’ he said.

According to him, the inflation is trending upward and it can get worse because of the minimum wage that is about to be implemented.

He urged the apex bank to arrest and maintain price stability.

Nwokoma said: “The primary function of the Central Bank is price stability; Monetary Policy Committee specifically, is to maintain price stability and they have been arresting that for some time now and it’s been coming down; now its trending up.

“I don’t think they will want to lower rate; they will rather maintain it, if not even increase it, because they cannot see inflation trending upward and you are now loosening interest rate.

“That may not be what anybody will expect. So, I think they will seek redress to find stability,’’ he said.

In the same vein, the Chief Operating Officer of CitiServe Limited, Mr Jubril Salaudeen, believes that the monetary policy rate would be maintained.

“I strongly believe that CBN Monetary Policy Rate will be maintained at 13.5 per cent.

“Maintaining the monetary policy rate at its present level is essential for better understanding of the momentum of growth before determining any possible modifications.

“ The border closure and associated changes to deposit and withdrawal of cash across the country have upset the system a bit.

“Also, this will help the country to tame inflationary pressures as headline inflation rose to 11.37 per cent,’’ he said.

NAN reports that the MPC, at its last meeting in September 2019, left the MPR at 13.5 per cent and kept all other variables unchanged.

Liquidity ratio was left at 30.00%, Cash Reserve Ratio (CRR) at 22.5%, and the asymmetric corridor unchanged at +200/-500 basis points around the MPR.

MPR is the interest rate at which CBN lends to the commercial banks.

The MPR is the benchmark against which other lending rates in the economy are pegged and is usually used as an instrument to moderate inflation in the economy.

CRR refers to the ratio of customer deposits banks are expected to hold as cash or keep with the CBN.

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