CBN’s unconventional monetary easing approach to continue —Analysts

Ahead of the second meeting of the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN), a herd of finance and economic analysts have concluded that the slight lowering in February inflation numbers will make the apex banking sector regulator to continue with monetary policies that are different from what is usual or from the way most central banks do theirs.

The committee is expected to hold its second meeting for the year between 25th and 26th March, 2019.”We believe February inflation numbers should make committee members more comfortable with monetary easing,” analysts from Afrinvest (West) Africa limited, a Lagos- based investment banking and asset management group said in a note to clients.

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Also, analysts at Financial Derivatives Company(FD ) Limited are of the view that all eyes will now be on the MPC at their meeting in  to see their reaction. “The MPC will be pleased with the fall in inflation which suggests that some of the policies to contain inflation can be considered to be successful,” the firm said. The political environment according to Afrinvest, is relatively calm.

There is more clarity on the direction of the economy and interest rate hikes have been put on hold by the central banks of advanced economies.” However, we do not foresee a reduction in the Monetary Policy Rate (MPR), which has been unchanged at 14.0% since July 2016.

“Instead, monetary easing would reflect the current stance of the CBN in the debt market, where yields have dropped by 0.4% post-elections and primary auctions are now less aggressive.,” the analysts observed.