Published On: Thu, Nov 24th, 2016

Tough year for Central Bank of Nigeria draws to a close

Central Bank of Nigeria

Central Bank of Nigeria

LAGOS – THE Central Bank of Nigeria’s Monetary Policy (MPC) on Tuesday brings to a close a tumultuous year for the policy makers.

The next MPC meeting is scheduled for January 2017.

The turbulent period has coincided with the economic decline, rising inflation and a slump in the value of the Naira.

“The CBN’s decision to stay the course, following two days of policy deliberations, was rather unsurprising given the prevailing stag flationary environment,” stated Rand Merchant Bank (RMB) following the conclusion of the MPC meeting.

During the meeting on Tuesday, the ten-person committee voted to preserve the monetary policy rate (MPR) at 14 percent, retain the cash reserve requirement (CRR) at 22,5 percent and maintain the liquidity ratio at 30 percent.

RMB believes CBN will hold the line in the first half of 2017, at least with regards to its interest rate policy.

“However, the market will eventually force the Bank to enact necessary FX reforms.”

Some analysts believed that the escalation in inflation paired with a stream of capital outflows would prompt further policy tightening.

However, a large number of market commentators believed that the CBN would stay put on rates.

“We were inclined to agree with the latter as the rate of increase in inflation has slowed dramatically in recent months, and was always likely to keep the CBN on hold,” RMB stated.

– CAJ News


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