CBN’s MPC Begins Two-day Economic Meeting Today

The Central Bank of Nigeria’s Monetary Policy Committee will begin its two-day bi-monthly meeting on Monday (today).

This came as analysts at Cordros Securities predicted that the MPC would retain the lending rates in the market after its July meeting.

The analysts disclosed this in the daily research that the MPC would keep rates unchanged despite external pressure

The analysts said, “On balance, we expect the committee to retain the MPR at 13.0 per cent alongside other monetary policy parameters to allow previous policy actions to permeate the economy.

“However, we expect the committee’s tone to be hawkish in the light of the tightening of monetary policy by global central banks and the election spending effect on inflationary pressures.”

The CBN had disclosed that its 286th MPC meeting would commence today (Monday) and end on Tuesday in Lagos.

Analysts at Cordros said since the last MPC meeting in May, global central banks have intensified their interest rate hiking cycles to contain the stubbornly high inflationary pressures.

They stated, “Federal Open Market Committee raised the federal funds rate by 75bps at the June policy meeting – the largest hike since 1994. At the same time, the MPC of the Bank of England increased the bank rate by 25bps to 1.25 per cent, the highest rate since January 2009 (1.50 per cent). We highlight common factors provided by both committees as justifications for increasing their respective key policy rates – (1) elevated inflationary pressures, (2) tight labour market conditions, and (3) risks that inflationary pressures have become more persistent.

“Notably, with the US CPI print for June rising to a record high of 9.1 per cent y/y and ahead of market expectations (8.8 per cent y/y) for the second consecutive month, the market is currently pricing a 75bps hike in the federal funds rate at the FOMC’s next policy meeting on 27 July.

“We believe the hawkish chorus among global central banks’ will be a major theme of discussion at this meeting, given that tighter global financing conditions result in capital flow reversals from emerging economies like Nigeria. Nonetheless, we think the committee will take solace in the CBN’s capital control measures and the last hike in the MPR to mitigate the exodus of FPIs from the economy.”