THE Central Bank of Nigeria (CBN) has scheduled the first Monetary Policy Committee (MPC) meeting under the tenure of Mr Olayemi Cardoso as governor, for 26 and 27 February.
Experts are convinced that the CBN publicly articulating its monetary policy direction is useful for anchoring inflation expectations and investor sentiments.
This indicates that the-no-MPC-meeting spree has the potential to dampen investor confidence and push inflation expectations higher.
For the first time in recent memory, the monetary policy committee (MPC) of the CBN has not held its bimonthly (once every two months) meeting for a straight five months. Some stakeholders believe that the MPC meeting should happen at least six times in a year, and since July 2023, the meeting has not been held.
However, according to a statement by CBN’s Acting Director, Corporate Communications Department, Hakama idi-Ali, the apex bank consequently held a two-day strategic session for members of the MPC, preparatory to the meeting.
Sidi-Ali said that the session aimed to brainstorm and engage in an in-depth discussion about the committee’s objectives.
She said that the critical focus areas during the retreat included deliberations on the strategic plan to effect necessary improvements in the monetary policy transmission mechanism.
She said that the sessions were facilitated by former MPC members, monetary policy communication specialists from the IMF and directors of departments critical to the MPC process.
“The valuable insights gained from these discussions will significantly contribute to the robustness of the forthcoming MPC meetings,” she said.
The last meeting of the MPC was held in July 2023 and was presided over by the erstwhile acting governor, Folashodun Shonubi.
At the July 2023 meeting, the MPC raised the benchmark interest rate, known as the Monetary Policy Rate (MPR), by 25 basis points to 18.75 percent from 18.50 percent.
Meanwhile, a calendar of meetings of the Monetary Policy Committee (MPC) for 2024, published on the CBN website, indicates that the meetings have been scheduled for February, March, May, July, September and November.
Managing Director of Financial Derivatives Company Limited, Mr Bismarck Rewane, had, at the weekend, in a review highlighted that all the top leadership of the CBN (the governor and the deputies) who are members of the MPC are new to the system and that suspension of the external members of the MPC comes with a risk of loss of institutional memory.
“Second, it amounts to a brazen violation of the CBN Act, which provides that the removal of such officers is subject to legislative ratification. The problem with such a violation of extant laws is that it sends undesirable latent signals to the market.
“Third, it depletes the credibility of the CBN and erodes public confidence in the independence of the CBN. Finally, it could disrupt the usual channels through which the central bank communicates its stance on inflation and economic policy.
“This lack of communication can lead to heightened uncertainty among market participants, businesses, and consumers alike, potentially de-anchoring inflation expectations,” the foremost economist stated.
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