No surprises expected from CBN’s Monetary Policy Committee

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By TEMITOPE Tanimowo

MON, SEPTEMBER 25 2017-theG&BJournal-The economy is responding to therapy and the numbers are looking good. From external reserves to inflation rate to GDP and even the once violently volatile exchange rate, makes for an unlikely tinkering of the existing Monetary Policy Rate (MPR) at 14% by the end of the two-day meeting of the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) tomorrow in Abuja, Nigeria.

Both the Cash Reserve Requirement (CRR) and the Liquidity ratio are forecast by economists to be retained at 22.5% and 30% respectively.

The CBN has so far walked-the talk, sustaining, as it said it would, its intervention in the currency market. Speculators seem to have taken a cue and fled the scene, at least for now. The headline Consumer Price Index is still in deceleration according to the numbers released by the National Bureau of Statistics (NBS) recently. Headline inflation dropped 4 basis points (bps) from 16.05% in July against the 16.01% seen in August.

GDP improvement to 0.55% year-on-year (y-o-y) in Q2 17 from a revised -0.91% in the previous quarter is arguably the best sign that suggests an economy wobbling but gradually grinding its way out of a worst case recession scenario.

“The exit from recession is also an indication that some of the government policies have impacted positively on the economy. This will impact positively on investors’ confidence in our economy,” according to Dr. (Mrs.) Nike Akande, CON, President, Lagos Chamber of Commerce and Industry, in press statement made available to theG&BJournal recently.

The stability of the Naira exchange rate to the dollar is helping investors deal with a conundrum.

There are still concerns though about the management of the exchange rate, particularly about multiplicity of exchange rates which has frequently been described as the CBN’s biggest riddle. But Pressure to divest from the economy or ignore exploring opportunities, especially by foreign investors, has eased considerably. Besides, the growth of the external reserves, currently recorded at $31.88 billion, has rendered this dilemma inconsequential.

Whatever happens to oil price, lessons, analysts say has been learnt. They see continued fiscal restraint and better focus on rates and the economy direction, given the whiplash received for sending it the wrong the other time.

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