FSDH Research has forecasts a further drop in inflation rate to 12.43% in April 2018, with a further drop to a single digit in July 2018 provided there is no food shortage in the country on account of the current rising crisis in the food producing areas of the country.
The head of Research, Ayodele Akinwumi, released the forecast at a monthly press briefing on the developments in the economy, which held in Lagos over the weekend.
He also noted that the reducing yield on the economy is justifying the drop in the yield of treasury bills.
The sharp drop in the yields in the Nigerian Treasury Bills (NTBs) in the last few months raises a question if the yield on 364-Day NTB will drop to a single digit, the first time since 2011. The average yields on the 364-NTB remained in single digit figures between 2008 and 2010 while inflation rate during this period was in double digit figure leading to negative real yields.
He said: “The recent drop in the inflation rate and our expectation that it may drop to single digit around July 2018, the recovery in the oil price leading to growth in external reserves and stability in the foreign exchange market, may drive the yields on the 364-Day NTB to single digit in the next few months.”
Akinwumi posits that the strategy of the DMO to restructure the domestic debt portfolio of the FGN from short-term to long term may further support a drop in the yields on the 364-Day NTB.