…Cordros highlighted the dovish signals from the CBN coming off the apex bank’s adjustment of the asymmetric corridor to +500/-100bps around the MPR
FRI SEPT 20 2024-theGBJournal| Cordros Research analysts forecast a stay in interest rates at 26.75%, as the Central Bank of Nigeria (CBN) Monetary Policy Committee meets next week to consider the next direction for interest rates in Nigeria.
”Our baseline expectation is for the MPC to adopt a “HOLD” stance in the forthcoming meeting, as we expect the Committee to refer to the recent decline in headline inflation, even as inflation risks are now strongly tilted to the upside,” Cordros said in a note to theG&Bjournal.
”Additionally, the intensification of global monetary policy easing reduces the risk of capital flight from developing markets like Nigeria, lessening the pressure for defensive rate hikes.”
Cordros highlighted the dovish signals from the CBN coming off the apex bank’s adjustment of the asymmetric corridor to +500/-100bps around the MPR.
Specifically, the CBN limited the Standing Deposit Facility (SDF) rate of 25.75% on deposits of up to N3 billion, with a fixed rate of 19.0% on excess deposits, thus discouraging banks’ utilisation of this window.
”As a result, fixed income yields have pared down over time. Given these developments, we expect the MPC to keep the policy rate at 26.75% while retaining all other parameters.”
The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) is expected to hold its fifth meeting of the year on the 23rd and 24th of September.
Like in previous meetings, the Committee is expected to consider developments in the global and domestic economy since the last policy meeting.
On the global scene, major central banks are easing monetary policies as headline inflation trends closer to target levels.
Domestically, Nigeria’s GDP growth remains resilient, while headline inflation has decelerated for two consecutive months.
However, near-term pressures suggest a potential uptick due to the substantial increase in the base price of PMS (+50.5% to N855.00/litre).
Additionally, Cordros Research points out recent efforts by the CBN to stabilise the naira amid the persisting demand pressure.
”Consequently, we expect the CBN to adopt a cautious stance, likely opting to maintain the interest rate to support economic stability,” Cordros said.
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