Monetary Policy Decision in H2-19: Any possibility of a rate cut?

Must Read

Airtel Nigeria Unveils New Cheap Data Plans to satisfy consumers growing demand for mobile Internet

… Rolls out 4G in Over 100 Cities, Towns Leading telecommunications services provider, Airtel Nigeria, has announced a massive increase...

The Importance of Diversifying Your Investments

Let us begin with what we all do – eating.  If you eat food, you will be familiar with...

List of Guaranty Trust Bank Sort Codes & Branches (with addresses) in Nigeria

The sort code is a number which usually identifies both the bank and the branch where an account is...
- Advertisement -
- Advertisement -

After keeping policy rates unchanged for more than 30-months, the Nigeria Monetary Policy Committee (MPC) reduced the MPR by 50bps in Mar-19 but left other variables such as; Cash Reserve Ratio (CRR) at 22.5%; Liquidity Ratio at 30%; and the Asymmetric Window around the MPR at +200/-500bps unchanged.

In line with the rate cut, the average yield on fixed income instruments moderated 215bps to settle at 12.0% in Jun-1 9. Also, the CBN is getting increasingly accommodative as system liquidity continued to build, measured by OBB and OVN rates which eased, averaging 11.4% in Q2-19 compared to 16.7% in Q1-19.

In H2-1 9, monetary policy outlook depends on the overall policy framework of Governor Emefiele following his reappointment in May-19. As Governor Emefiele head into his 2nd term, we expect him to begin to put the pieces of the 5-year plan together from H2-19. Meanwhile, with the recent moderation in the inflation rate, pro-growth market policies by the CBN, a more accommodative global central banks, we imagine the possibility of a further reduction in some of the key policy rates.

Read:  Investment Dilemma: Declining Yields Vs Crashing Equity Market

Notably, the CRR of 22.5% may be held unchanged given “the 50% on liquid asset” penalty imposed on banks who fail to meet the minimum L/D ratio of 60% by Sept-1 9. However, with the recent reduction in the maximum remunerable amount banks can place with the CBN, we believe the MPC might widen the spread at the asymmetric corridor, in a bid to further make placements at the windowless attractive. In all, we imagine a 50bps cut in the MPR in H2-19.

Read:  Commercial Banks Capital Adequacy Ratio Increases To 15.60 Per cent in 2 Months – CBN

United Capital Plc Research (UCR)

- Advertisement -

Subscribe to BrandSpur Ng

Subscribe for latest updates. Signup to best of brands and business news, informed analysis and opinions among others that can propel you, your business or brand to greater heights.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Latest News

betBonanza Celebrates New Season Millionaire (Photos)

Mr Ugonna Obialor has won the sum of ₦3,000,000 and emerged as the New Season Millionaire of Nigeria’s trailblazing...

Boska Organizes Pain Free Day Campaign In Kano Sate State To Promote Good Health In The Month Of September

Dexa Medica, the manufacturer of Boska pain reliever, Nigeria’s leading antidote to pains, organized a consumer activation in Fagge Local Government Area of Kano...

Boska Organizes Pain Free Day Campaign in Sokoto State To Promote Good Health in September

Dexa Medica, the manufacturer of Boska pain reliever, Nigeria’s leading antidote to pains, organized a consumer activation in Caliphate town of Sokoto tagged "Boska...

Boska Organizes Pain Free Day Campaign In Lagos To Promote Good Health In The Month Of September

Dexa Medica, the manufacturer of Boska pain reliever, Nigeria’s leading antidote to pains, organized a consumer activation in Lagos tagged "Boska Pain-Free Day" to...

More Articles Like This