Published On: Tue, Jan 24th, 2017

CBN projected to retain monetary rates

Central Bank of Nigeria, CBN

Central Bank of Nigeria, CBN

LAGOS, (CAJ News) – ANALYSTS expect the Central Bank of Nigeria (CBN) to announce unchanged monetary rates on Tuesday afternoon.
The position will be disclosed at the conclusion of the apex bank’s Monetary Policy Committee (MPC).
“Although monetary policy has been highly unpredictable over the past year, we believe that the CBN will hold the line today and for the rest of 1H17 (first half 2017,” Rand Merchant Bank (RMB) stated.
The market watcher said whereas talks of a hike and a cut made the rounds at the end of last year, consensus polls agree that the probable outcome will be an unchanged rate of 14 percent.
“In our view, it is clear that the central bank is limited in its capacity to affect GDP (gross domestic product) growth and monetary loosening would be undesirable in the context of sustained FX (foreign exchange) imbalances.”
RMB said in contrast, reinforcing tighter conditions to rein in inflation was counterproductive if the bank’s interest rate and FX policies are not aligned.
“The CBN has already emphasised that it cannot arrest the decline in domestic output, attributing the erosion of real incomes to idiosyncratic factors such as high energy prices and the accumulation of salary arrears.”
The MPC announcement on Tuesday comes amid the local Naira currency
weakening against the United States Dollar, raising calls for devaluation.
The currency is pegged at 350 to the greenback and around 500 in the
parallel market.
CAJ News

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