Companies and businesses await CBN’s decision on tariffs

Economic circles are concerned about the direction of monetary policies as the Central Bank of Nigeria (CBN) continues to review its economic policies to decide on tough monetary policies given the global and domestic outlook.
Investment bankers, financiers, investors, business owners, as well as research and advisory experts agreed on Monday that the decisions of the apex bank’s Monetary Policy Committee (MPC) will influence significant impact on the general economic outlook, including investment flows. between fixed and non-fixed securities markets.
But experts differed on the possible overall decision of the apex bank. While the majority believes that now is the time for the CBN to abandon its longstanding dove stance and raise the monetary policy rate (MPR).
Many pundits said the bank could opt to hold the rate, its classic policy view of recent times. The MPR has remained unchanged at 11.50% since September 2020, until yesterday when it rose to 13.5%.
The Financial Derivatives Company (FDC), headed by Bismarck Rewane, a member of President Muhammadu Buhari’s Presidential Economic Advisory Council (PEAC), said there was “no more room for the MPC to move” with the inflationary trend. high and continuous.
The National Bureau of Statistics (NBS) released its latest inflation report last week, showing consumer price inflation rose for the third consecutive month to 16.82% in April 2022, the level the highest in eight months.
While there was almost a consensus among analysts on rising inflation, the slope of the curve was steeper than expected: some 50 basis points above the average projection and 72 basis points at the above the International Monetary Fund (IMF) country projection for 2022 of 16.1%.
“The likelihood of monetary tightening has become infinitely more likely. If the CBN were to raise rates at its next MPC meeting, that would not be an outlier.
“This is because most apex banks in advanced and emerging economies, including sub-Saharan Africa, have started another round of aggressive tightening and raising interest rates to dampen inflation,” he said. the FDC.
“Overall, we believe the Committee would hold the MPR at 11.5% alongside other monetary policy parameters.
“However, we do not rule out the possibility of a 50 basis point hike in the MPR given the hawkish interpretation of global central banks and the indirect impact of the Russia-Ukraine crisis on domestic inflationary pressures” , said Cordros Capital.
According to the FDC, the relentless rise in inflation supports the case for a rate hike.
Former Chairman of the Chartered Institute of Stockbrokers (CIS) and Managing Director of Arthur Stevens Asset Management Limited, Mr Olatunde Amolegbe, said the rate hold seemed unsustainable in light of current economic realities.
He said: “The CBN has maintained the same monetary stance since 2020 but this now looks unsustainable with the growing pressure on the naira and the tightening stance we are seeing in developed markets which is likely to exert pressure. further inflationary impact on our economy.
“The recent inflation figures would also have sent warning signals to the CBN about the need to act quickly and decisively. So I think it might be time for them to turn to a gradual tightening regime aimed at stemming the depreciation of the naira and controlling inflation.
The naira depreciated 1.2% to 606.00 naira to the dollar in the parallel market over the weekend, as Nigeria’s foreign exchange (forex) reserves fell to their lowest level in eight months at $38.84 billion. But the naira was stable at 419.03 naira to the dollar at the official Investors and Exporters (I&E) counter.
Domestically, the sharp rise in headline inflation to 16.82% in April 2022, the highest since August 2021, will be of concern to committee members, especially as the trend will continue in the coming months in due to the pass-through impact of high global energy prices.

About Christian M.

Check Also

Connecticut resident dies of rare tick-borne virus – second death in US this year

check Getty A Connecticut resident has died of a rare virus after being bitten by …