By Omodele Adigun
As the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) prepares for its second meeting of the year, Nigerians have been forewarned not to expect any rate hike from the apex bank.
According to Dr Uche Uwaleke, Head of Banking and Finance Department, Nasarawa State University, Keffi, the CBN would likely retain all the rates to monitor inflationary trends.
Uwaleke, in an interview with the News Agency of Nigeria (NAN) in Lagos on Sunday said the MPC would retain the Monetary Policy Rate (MPR) at 14 per cent to monitor inflationary trends before relaxing the monetary policy.
He stated: “As it was in January; so it will be in March. I predict the MPC will leave the rates unchanged. “Members will be voting to allow for more time to monitor inflationary trends before taking a decision to relax policy.’’
Uwaleke added that the slight reduction of 0.94 per cent recorded in year-on-year headline inflation for the month of February was not real as it was due more from base effect. He explained that the Consumer Price Index (CPI) , which measured inflation, was calculated as a per cent change in price over a period.
The financial expert said that the reduction in headline inflation rate year-on-year recorded in February 2017 was largely due to the fact that during the corresponding period in 2016, the prices of food and non-food items went up significantly. He noted that it was in February 2016 that electricity tariffs spiked and February CPI was calculated from a larger base, the outcome was a rate which dropped by 0.94 per cent.
Uwaleke said that the MPC would most likely maintain the status quo with regard to the benchmark rate (MPR) at 14 per cent, cash reserve ratio at 22.5 per cent and liquidity ratio at 30 per cent. The MPC meeting will hold today and tomorrow to decide on the monetary policy direction.
Meanwhile, the Naira is set to appreciate further as the apex bank plans to inject more Foreign Exchange (Forex) into the market to meet the requests of genuine customers. Its spokesman, Mr Isaac Okorafor, gave the assurance in a statement on Sunday in Lagos. Recall that the CBN had so far kept to its promise of continuing to supply enough forex to guarantee liquidity in the market.
Okorafor explained in a statement that the bank was committed to ensuring that authorised dealers get sufficient supply to meet the demands of authentic customers of banks. He disclosed that CBN had since February offered over one billion dollars to the interbank market. The bank’s spokesman expressed optimism that stability had been restored to the forex market.