Interest Rate: What To Expect At The MPC Meeting

Gbenga Oyebode

The all-awaited monetary policy committee, MPC meeting is set to hold. The CBN will convene a usual session between next Monday and Tuesday to  determine if the apex bank will increase or hold interest rate.

It would be recalled that the CBN had in its last month MPC meeting increased interest rates from 12% to 14% in order to stem the tide of Nigeria’s skyrocketing inflation.

However, the confirmation by the National Bureau of Statistics, NBS that Nigeria is already in a recession after two consecutive quarters of posting negative growth makes the outcome of the MPC meeting very important.

The possibility of increasing interest rates is very slim given the fact that CBN will be looking at aligning with Nigeria’s plan to stimulate the economy via stimulus spending in infrastructure, agriculture and social welfare. All these will require borrowing by the government and the private sector as well.

The CBN has already taken steps to fight inflation by announcing that it will be selling about NGN1.76 trillion in treasury bills for the rest of the year. This plan is expected to reduce the amount of excess liquidity in the system and then channeling it to government’s plan on infrastructure, agriculture and safety nets programmes.

With massive job losses in the private sector and cash-strap states, the MPC is more likely to hold rates than increase it.

Leave a Reply

Your email address will not be published. Required fields are marked *