A don, Prof. Sani Badayi, on Sunday predicted that the Monetary Policy Committee (MPC) will reduce the benchmark interest rate to 12 per cent at its next meeting this week.
Badayi, Professor of Economics, Bayero University, Kano told the News Agency of Nigeria (NAN) in Abuja that recent drop in inflation rate would play a major role in the MPC’s decisions.
The News Agency of Nigeria (NAN) reports that the MPC, which among other things, decides the official interest rate would hold its second meeting this year in Abuja on March 20 and 21.
NAN reports that the CBN rose from its last MPC meeting on Jan. 24, retaining the Monetary Policy Ratio (MPR) at 14 per cent, alongside other monetary policy parameters.
Badayi said that from all indications, the economy was improving and the MPC would likely sustain that growth by reducing the MPR.
“MPC is likely to drop the Monetary Policy Rate from 14 per cent to 12 per cent.
“This is because the economy has started picking up and the inflation rate is slackening generally.
“Also, the recent ease in access and supply of dollars and stability in the Niger-Delta region in terms of oil production will influence the committee’s decisions.
“This is quite promising, so I think they are likely to lower it so that the economy and businesses can continue to pick up,” the economist told NAN.
However, Dr Ogbo Okiti, President, Time Economics, said that the MPC is more likely to retain the existing rates because the economy was still cloaked in uncertainties.
“I think they will leave the rates unchanged and the reason is very simple.
“Yes, we are seeing some positives; inflation rate is coming down, oil prices are going up and we are seeing signs that the economy is growing.
“However, all these growths are not concrete yet. There is still a high level of uncertainty.
“So, because of that level of uncertainty, I will still expect a cautious approach to monetary policy.
“The MPC will be cautious until they begin to see firm growth, firm increases in government revenue and expenditures which we have not really seen because the 2017 budget has not been passed.
“So, if you look at everything, even though there are positive trends on inflation, on growth, on government revenue, on oil prices, they are not firm enough,” Okiti said. (NAN)
RI/OSA/WOJ