As the Central Bank of Nigeria (CBN) begins the 297th Monetary Policy Committee (MPC) meeting today, financial analysts and experts expect that the apex bank might not be in the mood to lower or increase the rate following a recent improvement in macroeconomic indicators.
There are indications that the MPC would keep the rate to support the disinflation objectives as inflation recorded a drop in two consecutive months.
The National Bureau of Statistics (NBS) had last week reported that food inflation dropped in the month of August 37.52% on a year-on-year basis even as headline inflation dropped to 32.15 per cent, second consecutive drop in two months.
In a report, the NBS explained that the figure, on a month-on-month basis, was 2.37% which shows a 0.10% decrease compared to the rate recorded in July 2024 (2.47%).
- NIGERIA DAILY: What Comes Next After The Edo Governorship Election?
- Flood: Zulum constitutes panel to disburse fund, lists EFCC, DSS, others as members
However, the MPC meeting on Monday and Tuesday to take a decision on key rates, according to analysts, would be dependent on the current state of the economy.
Analysts at Cordros Capital Limited expect the MPC to maintain existing rates in line with recent decline in headline inflation.
The firm in a note ahead of the meeting said, “We think the Monetary Policy Committee faces a pivotal decision – either maintain current rates to allow previous hikes to fully impact the economy or continue rate increases to reinforce gains from prior adjustments owing to the elevated inflation risks exacerbated by the recent rise in PMS price.
“Our baseline expectation is for the MPC to adopt a “HOLD” stance in the forthcoming meeting, as we expect the committee to refer to the recent decline in headline inflation, even as inflation risks are now strongly tilted to the upside.”
Prof. Anthony Kila, a Commonwealth Institute director and political economist, urged the apex bank to pause the hike in interest rates even though the decision might not have much effect on lowering the cost of living,
He said, “In most organised and noteworthy economies, the MPC meetings are anticipated with anticipation and hope. The outcomes of these meetings have direct impacts on various sectors of the economy, including financial, retail, and real estate, because interest rates matter for and affect everyone.
He however advised that for the MPC decisions to reflect on the day-to-day life experiences of the people, the CBN “needs to take cognisance of these limits and work towards reviewing its index for measuring inflation, growth, and other economic indices.”
“It should also work towards making interest rates central to people’s lives by deliberately enhancing consumer finance facilities and processes and allowing fiscal policies to take their rightful place in the economy,” he added.
Join Daily Trust WhatsApp Community For Quick Access To News and Happenings Around You.
