Little to Warrant Any Change from the MPC

Date:

The monetary policy committee (MPC) opens its latest meeting in Abuja today, and is due to announce its decisions tomorrow afternoon. At its meeting in September it voted by six votes to one for no change in stance. Little has changed to warrant any other conclusion this week. The policy rate has been held at 14.00% since mid-2016, and we expect the same on a majority vote. We are disappointed that the CBN has not yet released members’ personal statements from September.

Thank you for reading this post, don't forget to subscribe!

If those statements historically do show a common thread, it is the determination to fight inflation. The headline rate continues to fall at a slow pace, to 15.9% y/y and 0.8% m/m in October. The cumulative decline amounts to 283bps since January y/y, and 111bps since May m/m.

The stability of the fx rate in the various windows in recent months has clearly been a positive. If this is maintained, which is our expectation, we should see sharper falls in the headline rate y/y in H1 2018 as strong m/m increases from February to June this year drop out of the calculation. The monetary authorities could then return to the path of easing.

The committee likes to say that supply-side constraints are responsible for the pick-up in inflation and the (now-ended) recession. It could have added the CBN’s previous fx policies to its analysis. The culprit in the bigger picture is the slide in the oil price since mid-2014, which has exposed Nigeria’s macroeconomic frailties. The blame in this case cannot be laid at the door of the CBN or the MPC.

The MPC’s ability to encourage growth is constrained by the “disconnect” between its benchmark rate and those for the real economy, as well as by the high concentration of banks’ loan books both sectorally and in terms of company size. In contrast, fiscal policy has greater capacity to encourage growth.

Without wanting to suggest that the committee has been emasculated, easing by the MPC does not automatically benefit borrowers in the real economy. (When it hikes, the story is different.) Turning to FGN borrowing, there has been a welcome fall in yields but driven by CBN guidance rather than action by the MPC. At last week’s auction of NTBs, the yield on the 364-bill was 400bps lower than at end-August. The fall came largely at one auction (04 October), and rates have since stabilised.

Peter Okafor
Peter Okaforhttp://Naija247news.com
Peter Okafor Financial Journalist | Editor | Contributor Overview: Peter Okafor is a seasoned Financial Journalist, astute Editor, and valued Contributor at Naija247news Media Group. With an unwavering passion for dissecting complex financial landscapes, Peter has become a trusted name in delivering incisive and insightful coverage of economic events, market trends, and corporate dynamics. Professional Journey Peter's journey in financial journalism has been marked by a commitment to excellence. Joining the ranks of Naija247news, he has consistently demonstrated a keen understanding of the intricate interplay between finance and the global socio-economic fabric. Expertise: Specializing in financial markets, economic analyses, and business developments, Peter Okafor has honed his expertise over the years. His ability to unravel intricate financial narratives and present them in a comprehensible manner sets him apart in the world of financial journalism. Contributions As an Editor and Contributor, Peter has played a pivotal role in shaping the narrative of Naija247news. His contributions extend to thought-provoking articles, in-depth market analyses, and coverage of key events that impact the financial landscape. Educational Background: Peter holds a degree in Journalism, complemented by specialized courses in Finance and Business Reporting. His educational foundation has provided him with the tools to navigate the intricate world of financial journalism. Innovation and Adaptability: In an era of evolving media landscapes, Peter Okafor exemplifies innovation and adaptability. Leveraging digital platforms and emerging technologies, he ensures that financial insights reach a diverse audience, fostering financial literacy and awareness. Awards and Recognition: Peter's commitment to journalistic excellence has not gone unnoticed. He has been the recipient of several awards, recognizing his outstanding contributions to the field of financial journalism. Vision for the Future: Looking ahead, Peter Okafor envisions a future where financial journalism continues to empower individuals, shape economic policies, and drive positive change. His dedication to staying at the forefront of financial news underscores his commitment to this vision. Connect with Peter Okafor: - LinkedIn: [Peter Okafor](#) - Twitter: [@PeterOkafor_N247](#) In the dynamic realm of financial journalism, Peter Okafor stands as a stalwart, combining experience, expertise, and a forward-looking vision to illuminate the path of financial understanding for a global audience.

Share post:

Subscribe

Popular

More like this
Related

Access Holdings to pay N1.80 as final dividend to shareholder

March 28, 2024. Azonuchechi Chukwu. Access Holdings has revealed plans to...

Police gun down two notorious bandits in Benue

March 28, 2024. Azonuchechi Chukwu. Men of Operation Zenda, a Joint...

Army declares eight wanted in connection with the k!lling of its officers in Okuama

March 28, 2024. Azonuchechi Chukwu. The Nigerian Army has declared eight...

Naira Appreciates Against Dollar at the NAFEM Window

March 28, 2024. Azonuchechi Chukwu. The Naira’s euphoric appreciation against the...
Social Media Auto Publish Powered By : XYZScripts.com

Discover more from Naija247news

Subscribe now to keep reading and get access to the full archive.

Continue reading