AS the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) meets on September 26 and 27, 2022, analysts have predicted that the committee will raise the Monetary Policy Rate (MPR).
According to them, the second quarter real GDP growth rate (3.54 per cent) and the 52.3 Purchasing Managers Index (PMI) figure for August would further encourage the MPC to advance its hawkish policy stance.
Inflation had risen further to 20.52 per cent in August despite a 100 basis points (bp) increase in the MPR by the MPC in its last meeting in July.
At the last meeting, one member voted to increase the MPR by 150 basis points, six members by 100 basis points, one member by 75 basis points, and three members by 50 basis points, reflecting the hawkish tone of the committee.
However, in a new report titled, ‘Risk of Global Recession in 2023 Rises Amid Simultaneous Rate Hikes,’ the World bank had said the currently expected trajectory of interest-rate increases and other policy actions might tip the global economy into a recession with greater implications for developing economies like Nigeria.
The US Fed has recently raised rates by 75bp for the third time in a row to bring the federal funds rate to three per cent while the Bank of England (BoE) advanced its hawkish monetary policy by hiking rates by another 50bp to a 14-year high of 2.25 per cent.
Analysts are of the view that unless supply disruptions and labour-market pressures subsided, the global core inflation rate could remain at about five per cent in 2023 – nearly double the five-year average before the pandemic.
On the back of more aggressive rate hikes, however, emerging markets are expected to experience greater external liquidity problems as debt service cost mounts, experts further submitted.
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