Monetary Policy in Nigeria: Stuck Between Two Arms!


Having seen unchanged policy rates all through 2017, consensus view supports a rate cut by the Monetary Policy Committee (MPC) in H1-18. Although well based, given a brighter macro outlook for the Nigerian economy, the likelihood of a rate cut come March 19-20th, the proposed date for the next MPC meeting remains unlikely amid events in the political space.

Monetary Policy in Nigeria: Stuck Between Two Arms! - Brand Spur

According to the law, the MPC cannot seat except at least 6 of the 12 committee members are available. Interestingly, between July-17 and Dec-17, 8 members either retired or completed their tenures, thus, leaving the committee with only 4 members (mainly the CBN Governor and Deputy Governors) who cannot form the required 6-member quorum. However, the major twist to the story is the pending Senate confirmation of the new members of the MPC appointed by the President due to the lingering standoff between the Executive and the Legislator on confirmation of previous political appointments.

Accordingly, while we maintain our view that a rate cut is imminent, we note that the continued the impasse between the two arms of government suggests that the MPC may skip the March seating again, thus, pushing the possibility of policy rate adjustment to May-18, ex