There were strong expectations yesterday that the benchmark interest rate will go up as the Central Bank of Nigeria (CBN) begins its two-day policy-decision meeting today.
Most analysts surveyed by The Nation said they expected the Monetary Policy Committee (MPC) of the apex bank to increase the Monetary Policy Rate (MPR).
They, however, differed on the extent of increase. Their predictions ranged between 50 and 75 basis points.
The MPC had at its last meeting in July 2022 raised the benchmark interest rate by 100 basis points to 14.00 per cent, bringing the increase so far this year to 250 basis points.
Afrinvest (West Africa) Limited said the rising inflation rate and considerable growth in Gross Domestic Product (GDP) in second quarter 2022 had solidified expectation of a new rate hike by MPC.
Afrinvest aligned with the majority view of a 50 basis point hike in MPR to 14.50 per cent, noting that inflation will continue its upward trajectory; with expectation of an increase of 60 basis points to 21.1 per cent.
Bismarck Rewane’s Financial Derivatives Company (FDC) at the weekend said it expected the MPC “to remain committed to its price stability mandate and may further hike the interest rate as inflation remains elevated”.
Analysts at Cordros Capital said they expected the MPC to “increase the MPR by at least 50 basis points and to adjust the asymmetric corridor back to its pre-COVID level of +200/-500 basis points from +100/-700 basis points around the MPR, given the continued hawkish rendition of global central banks amid a comfortable level of domestic growth and persistent inflationary pressures”.
Cordros Capital noted that the apex bank’s meeting comes at a time global central banks are marching on with their interest rate hiking cycle despite the increasing risks to growth.
According to them, the MPC will during the two-day meeting assess the domestic and global economic environment, specifically the key economic and financial indicators since its last policy meeting in July 2022.
