Published On: Tue, Jan 24th, 2017

Market keenly awaits CBN policies on economy

Central Bank of Nigeria

Central Bank of Nigeria

LAGOS, (CAJ News) – THE Central Bank of Nigeria (CBN) is seen as placed between a rock and a hard place ahead of key decisions on its monetary policy to be announced on Tuesday afternoon.
However, it is highly likely to maintain its defiant stance on the exchange rate.
The decisions will be made a day after the monetary policy committee (MPC) opens its latest meeting in Abuja on Monday.
“We see an unchanged stance,” First Bank Nigeria stated.
It pointed out the committee was faced with an economy which has contracted year-on-year for three successive quarters and inflation which has accelerated for eleven months in a row on the same basis.
“GDP has gone into reverse due to the failure to diversify the economy and
to the sabotage in the Niger Delta. Inflation has risen far above target due to supply-side factors,” FBN said.
The bank absolved the apex bank from the upheavals.
“The MPC cannot be said to be the main culprit in either case although, along with the CBN, it has exchange-rate responsibilities and could have acted differently over the past 18 months.”
FBN said these factors pointed to no change in stance this week.
“The MPC and CBN are looking to the fiscal side to lift the economy out of
recession,” the bank pointed out.
On exchange-rate policy, FBN would be surprised by a change as early as
this week.
“We do not see any signs that the monetary authorities or the political
leadership are thinking in terms of a new direction.”
However, there is a slight possibility CBN could hike in response to the
surge in inflation, and to encourage savings, FBN projected.
CAJ News

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