As the members of the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) meets today and tomorrow, March 21 and 22, in Abuja, analysts and operators in the Nigerian financial system have said that they expect the committee to focus more on stimulating growth in the Nigerian economy.
The MPC at its last meeting in January had maintained the status quo inspite of the rising inflation, keeping benchmark interest rate at 11 per cent and cash reserve requirement at 20 per cent.
It had also maintained its stand against devaluation despite the wide gap between official exchange rate and parallel market rates.
February inflation figure had risen to a 3-year high of 11.4 per cent, up from 9.6 per cent in January. Despite this, analysts said that the MapC would not be looking at battling inflation by raising rates.
The chief executive of Financial Market Dealers Association, Wale Abe, noted that the CBN which has adopted a stance towards boosting credit to the real sector would also want to toe the line of the federal government by making policies that would boost the growth of the Nigerian economy.He noted that he does not expect the interest rate to be increased and this was also the opinion of Olakunle Ezun of Ecobank who said that the MPC members would be much more concerned about stimulating growth in the economy.
Ezun noted that there is a higher likelihood of the committee maintaining status quo and a slight chance that they might reduce benchmark interest rate, although he added that a reduced rate may not have the desired effect of higher lending at a lower rate to the real sector.
Also financial analysts at Afrinvest West Africa said that they expect the committee to deliberate on policy measures to lift growth, attract foreign private capital and ease pressure on consumer prices. The analysts affirmed that the probability of the committee holding all rates constant and continuing to harp on structural reforms and policy coordination with the fiscal arm is 80 per cent.
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