Nigerian Financial Markets Report
Dear Esteemed Client:
The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) today concluded its 2-day meeting, which marked the last for 2019, with the Committee deciding by a unanimous vote to hold all policy parameters constant for the fourth consecutive time. The MPC voted to retain Monetary Policy Rate (MPR), Cash Reserves Ratio (CRR) and Liquidity Ratio at 13.50%, 22.50% and 30.00% respectively. The asymmetric corridor around the MPR was also left unchanged at +2.00% /-5.00%. The Committee’s decision to do nothing was predicated on some of the recent policy changes introduced which are believed to be gradually yielding fruits for which MPC argued that, changing policy stance may be premature. The Committee sited gradually improving growth trajectory and temporary pressure on price levels as supportive of a hold decision so as to properly evaluate the effect of recent policy moves, especially the introduction of minimum Loan to Deposit Ratio (LDR) of 60.00% in September 2019.
In our view, the financial market largely anticipated the “do nothing decision”; hence, we do not expect any market reaction to the communique. In the face of rising threats of price pressures, weak growth momentum and global uncertainties around trade wars, we believe the CBN will continue to deploy the short term market rates to achieve various objectives of sustaining foreign capital flows and stimulating economic growth even if MPR remains unchanged. Read more…
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