Expert says MPC unanimous interest rate decision was consistent with market consensus

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Lagos, Jan. 26, 2021 The Association of Capital Market Academics of Nigeria (ACMAN), on Tuesday said that rates retention by the Monetary Policy Committee (MPC) was in line with market expectations.

ACMAN President, Prof. Uche Uwaleke, disclosed this in an interview with newsmen 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.

Naija247news 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.

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Godwin Okafor is a Financial Journalist, Internet Social Entrepreneur and Founder of Naija247news Media Limited. He has over 16 years experience in financial journalism. His experience cuts across traditional and digital media. He started his journalism career at Business Day, Nigeria and founded Naija247news Media in 2010. Godwin holds a Bachelors degree in Industrial Relations and Personnel Management from the Lagos State University, Ojo, Lagos. He is an alumni of Lagos Business School and a Fellow of the University of Pennsylvania (Wharton Seminar for Business Journalists). Over the years, he has won a number of journalism awards. Godwin is the chairman of Emmerich Resources Limited, the publisher of Naija247news.

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