By Munachimso Obienyi
The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) is expected to make a decision of holding or hiking the Monetary Policy Rate (MPR) today.
This is coming at a time global central banks are marching on with their interest rate hiking cycle despite the increasing risks to growth.
According to economic analysts who spoke to NwafoLive, the Committee is expected to assess the domestic and global economic environment in the context of developing key economic and financial indicators since its last policy meeting in September.
“In our view, the absence of a significant shock to economic activities since the previous meeting will provide respite that the economy likely maintained its steady growth path in Q3-22. Thus, we believe the preceding will give the Committee a reason to maintain its fight against the stubbornly-high inflationary pressures, more so that a continued negative real interest rate could dampen domestic investments and undermine the local currency’s stability”
“Moreover, the more hawkish rendition from global central banks also supports the Committee towing the same path to reduce external pressures. Thus, we think a further tightening of the policy rate is necessary to re-anchor inflation expectations which an econometric study by the CBN shows is the most significant driver of actual inflation in Nigeria, according to one of the Committee members”
“Consequently, we think a further interest rate hike is likely at the meeting. Accordingly, we expect the Committee to raise the MPR by an additional 100bps”, analysts at Cordros Research said.
