CBN Governor, Olayemi Michael Cardoso
CBN’s MPC set to raise interest rate by 100bps
Central Bank of Nigeria (CBN) through its Monetary Policy Committee (MPC) is set to raise the interest rate by 100 basis points, during its scheduled meeting, next week.
The MPC is expected to meet from November 20 -21in Abuja after failing to have its September policy meeting, following the appointment of the new CBN Governor, Mr. Olayemi Cardoso.
Since the last MPC meeting in July, the monetary policy space has changed rapidly, given some orthodoxy introduced by the CBN, particularly since the beginning of October.
Reports claim that ‘further rate hikes by the MPC will send a strong message that the regulatory bank is not relenting in its inflation fight, particularly as near-term inflation expectations are tilted to the upside, potentially reaching a 28.02 per cent y/y peak in December.’
The CBN is said to continue in its line of thinking that ‘maintaining the MPR at current levels will not be synchronous with the lingering increase in the market interest rates.’
Consequently, the sources close to the CBN expect the MPC to increase the MPR by at least 100bps at its November policy meeting.
The significant changes that have taken place in the monetary space since the last time the MPC met include: (1) removing the maximum limit on the Standing Deposit Facility (SDF) and (2) OMO auctions.
In the following paragraphs, we discuss these monetary policy measures since the July policy meeting and their feed through into our expectations when the Committee meets on November 21.
