The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) is scheduled to meet on the 23rd and 24th of July 2015 to review developments in the global and domestic economy over the past 60 days and decide on monetary policy stance in the near-term.
The committee will be looking into –
- International Economic Developments
- Domestic Economy and Financial Developments
- – Liquidity
- – Exchange Rate
- – External Reserves
- – Inflation
- – GDP
According to the CBN’s Pre-MPC Communiqué issued to all Nigerian banks, it is expected the major highlights of the meeting are likely going to be:
- Retain MPR at 13%, leaving the +/-200basis points corridor: The MPC is likely to retain the benchmark rate at 13% as higher interest rates will negatively impact economic growth, further dampening already depressed business confidence, which in turn will choke off investment and future economic growth.
- Retain Prevailing Order-Based Exchange Rate Regime: The introduction of additional restrictions to accessing dollars suggests that the monetary regulator is intent on supporting the naira for the meantime. The continued stability observed at the interbank foreign exchange market segment will most likely spur the CBN to maintain course. That said, the growing dislocation between the interbank and BDC rates may compel the CBN to alter its stance by devaluing the naira.
- Retain the Cash Reserve Requirement (CRR) at 31%.
- Retain Liquidity Ratio at the prevailing rate of 30%.
- Retain the net open position limit (NOPL) on foreign exchange trading positions of banks at 0.5%: The move by JPMorgan to delay a final decision on Nigeria’s possible ejection from its government bond index allows the Central Bank of Nigeria (CBN) to maintain tight forex liquidity in the interim.
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