First MPC: Experts applaud CBN’s rates retention

ACMAN President, Prof. Uche Uwaleke, disclosed this in an interview with the News Agency of Nigeria (NAN) in Lagos, while reacting to the outcome of the first MPC meeting.

Uwaleke who lauded rates retention said the MPC unanimous decision was consistent with market consensus.

“The MPC did not disappoint. Their unanimous decision is consistent with market consensus and expectations.

“By doing so, the Central Bank of Nigeria will have some more time to monitor macroeconomic response to all its interventions in the wake of COVID-19 pandemic,” he said.

Uwaleke also a Professor of Capital Market at the Nasarawa State University Keffi, said that rates retention was due to rising inflation and stabilisation of the exchange rate.

“As usual, the choices before the MPC was whether to reduce, increase or hold the rates.

“While on the one hand, a rate cut appeared justified by need for the CBN to support economic recovery efforts of the government.

“On the other hand, the need to stabilise exchange rate as well as tackle the rising inflation favoured tightening monetary policy.

“This presented a dilemma which the MPC rightly managed by maintaining the status quo and holding the rates in a bid to strike a balance, between the two seemingly diametrically opposing sides of enabling output growth and curbing rising inflation,” Uwaleke said.

Also, Mr Ambrose Omordion, the Chief Operating Officer, InvestData Ltd., said the rates were retained in order not to short live the seeming economic recovery.

Omordion said that the development would further support the growth of the equity market ahead of 2020 earnings season.

He noted that the prevailing negative returns in the fixed income market would make investors to seek for higher returns at equity market until yields start improving.

NAN reports that the MPC at the end of the 277th edition meeting unanimously voted to retain the Monetary Policy Rate (MPR) and other key parameters at their current rates.

Consequently, the committee retained MPR at 11.5 per cent, the asymmetric corridor around the MPR at +100/-700bps, Cash Reserves Ratio at 27.5 per cent, while liquidity ratio was also retained at 30.0 per cent. (NAN)