United Capital Sees Possible Rate Hike At Next CBN MPC Meeting
By Olumidagreaton November 16, 2018
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The Nigeria Monetary Policy committee (MPC) will hold its last policy meeting next week-19th to 20th Nov-2018.
From July 2016 till date, the committee has kept all policy rates unchanged, retaining MPR at 14 percent; CRR at 22.5 percent; Liquidity Ratio at 30 percent; and the Asymmetric Window around the MPR at +200/-500bps.
Despite expectations of a less hawkish stance earlier in the year, the decision to maintain status quo over the past two years and counting, has been driven by sustained global uncertainties amid policy normalization in the US and fear of a stronger US Dollar, faltering output recovery and currency market fragility in the local economy amid renewed pressure on inflation rate, elevated food prices and growing political/election spending.
Ahead of the November meeting, increased uncertainties in the global market and growing tension in the domestic polity, suggest that a more accommodative monetary policy by the MPC is broadly unlikely in the immediate term.
More so, an anticipated increase in domestic wage bill may pressure headline inflation higher. Accordingly, we retain our position that the MPC will not tinker with policy rate, though arguments for a rate hike may come stronger.
Nevertheless, we expect the Apex bank to continue to the pace of aggressive liquidity mop-up amid increased election spending and pressure on the local unit.