MPC meeting: Balancing negative growth and rising inflation

Must Read

MTN Nigeria Appoints Karl Toriola as CEO

MTN Nigeria is pleased to inform The Nigerian Stock Exchange (The Exchange), the investing public and other stakeholders of...

Free 250,000 FG/CAC Business Names Registration for MSMES

Business formalisation Support of the Micro, Small & Medium Enterprises (MSMEs) Survival Fund As part of Federal Government’s post-Covid-19 Pandemic...

How To Block Your Bank Account And SIM Card In Case Of Emergency

Losing your phone and wallet or having them stolen can be very frustrating. However, in case that happens to...
- Advertisement -

The Nigerian Monetary Policy Committee (MPC) in its fifth meeting in 2020 is currently considering, amongst other things, developments in the global and domestic economy to decide on the next monetary policy action to take. So far this year, the committee had voted to increase Cash Reserve Ratio by 500bps in its January meeting, reduced the MPR by 100bps in its May meeting and maintained status-quo, leaving the monetary policy rates and other parameters unchanged, in the July MPC Meeting.

Since the July-2020 meeting, most of the concerns remained unchanged or have deteriorated. In the domestic market, inflation continues to track higher, and printed 13.2% in Aug-2020- the highest in 2 months, pressure on the local unit and reserves remain unabated, amid widening trade deficit and currency market illiquidity despite the resumption of FX sale to BDCs by the CBN.

Furthermore, Q2-2020 GDP numbers showed a 6.1% decline, the largest contraction in three decades, signalling that the economy will slip into a recession by Q3-2020 amid the coronavirus outbreak and the ensuing lockdown. Yet, oil prices firmed at c.$40/ b even as monetary policy authorities around the world maintained an accommodative stance to spur growth.

Read Also:  Inflation Increased by 11.28% in September 2018; 0.05 Higher Than August 2018 Rate

Despite the recent policy reforms observed in the energy sector, (Subsidy removal, electricity tariff adjustment), we doubt that The Committee will tweak any of the policy variables.

However, we are of the view that the MPC will have to brainstorm on the appropriate policy dosage to apply in other to restore GDP Growth, pullback inflation to below 12%, resolve the dislocation between market rate of interest and a real return to attract foreign investment as well as stimulate domestic savings, and lastly, fix the currency.

- Advertisement -

UNITED CAPITAL RESEARCH

- Advertisement -
MPC meeting: Balancing negative growth and rising inflation - Brand SpurMPC meeting: Balancing negative growth and rising inflation - Brand Spur

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.

- Advertisement -

LEAVE A REPLY

Please enter your comment!
Please enter your name here
Read Also:  Headline Inflation Ticked up by 49 bps to 13.71% in September

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

MPC meeting: Balancing negative growth and rising inflation - Brand SpurMPC meeting: Balancing negative growth and rising inflation - Brand Spur

Latest News

IITA BIP and partners host virtual Vegetable Field Day for farmers

Vegetables are one of the most consumed foods worldwide because of their high nutritional value. Although the vegetable business...

Researchers reveal a more sustainable approach to address postharvest fish losses

Small-scale inland capture fisheries contribute significantly toward enhancing the food, nutrition, and economic security of millions of people in low-income countries. Over time, several...

Harnessing insect biodiversity for sustainable plant health in tropical Africa

Fall armyworm (FAW), a ravaging pest of the maize plant, is spreading globally. Every year, Africa, Asia, and the Near East lose 80 million...

Agriculture stakeholders discuss possible solutions to food insecurity and trade challenges in Nigeria

On 29 September, the National Action Committee on the African Continental Free Trade Area (AfCFTA) held a virtual workshop on Agriculture and Agribusiness. The...

Global consumer sentiment still reviving slowly

At 42.2, the Global Consumer Confidence Index is up slightly over last month (41.8). September is the fourth consecutive month showing gains-in consumer sentiment...
- Advertisement -
BrandsPur Weekly Cartoons
- Advertisement -MPC meeting: Balancing negative growth and rising inflation - Brand SpurMPC meeting: Balancing negative growth and rising inflation - Brand Spur