Don predicts MPR retention by MPC; a head of its meetings on March 20 & 21 to monitor inflationary trend

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A don, Dr Uche Uwaleke, on Sunday predicted that the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) would retain all the rates to monitor inflationary trend.

Uwaleke, Head of Banking and Finance Department, Nasarawa State University, Keffi, made the prediction in an interview with the News Agency of Nigeria (NAN) in Lagos.

He said that MPC would retain the Monetary Policy Rate (MPR) at 14 per cent to monitor inflationary trend before relaxing the monetary policy.

“As it was in January; so it will be in March. I predict the MPC will leave the rates unchanged.

“Members will be voting to allow for more time to monitor inflationary trend before taking a decision to relax policy,’’ he said

Uwaleke said the slight reduction of 0.94 recorded in year-on-year headline inflation for the month of February was not “real’’ as it was due more from “base effect’’.

He explained that the Consumer Price Index (CPI) which measured inflation was calculated as a per cent change in price over a period.

Uwaleke said that the reduction in headline inflation rate year-on-year recorded in February 2017 was largely due to the fact that during the corresponding period in 2016, the prices of food and non-food items went up significantly.

He noted that it was in February 2016 that electricity tariffs spiked and February CPI was calculated from a larger base, the outcome was a rate which dropped by 0.94 per cent.

Uwaleke said that the MPC would most likely maintain the status quo with regard to the benchmark rate (MPR) at 14 per cent, cash reserve ratio at 22.5 per cent and liquidity ratio at 30 per cent.

The MPC meeting will hold on March 20 and 21 to decide on the monetary policy direction.

The MPC at the maiden 2017 meeting in January held the benchmark interest rates at 14 per cent.

Godwin Emefiele, the Governor of CBN, announced that the committee also decided to keep the Cash Reserve Ratio (CRR) and liquidity ratio at 22.5 per cent and 30 per cent, respectively.

He said the 10 members present at the meeting decided unanimously to keep the asymmetric corridor at +200 and +500 basis points.

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