May 16, 2019 09:54AM / By CBN
Financial market conditions were influenced largely by global economic and political developments in 2018. On the economic front, the interest rate hikes in the United States indicated that normalisation of monetary policy was more rapid than initially anticipated. The impact of these rate hikes largely weakened currency, bond and equity market of emerging economies.
The US-China trade war, continued to exert strains on both economic and political grounds, further increasing the uncertainties in the global financial markets. In view of these developments, reinforced by country-specific factors of tightening financial conditions, higher oil import bills and geo-political tensions, global growth projection was downgraded to 3.7 per cent from an earlier projection of 3.9 per cent.
Notwithstanding the global downside risks, growth outcomes in Nigeria, in real terms, though modest, were higher than in 2017. The series of policy measures implemented by both the monetary and fiscal authorities to ensure price stability and restore growth trajectories midwifed the rebound.
The Monetary Policy Rate (MPR) remained at 14.00 per cent, with the asymmetric corridor of +200/-500 basis points, and the Cash Reserve Requirement (CRR) at 22.50 per cent in line with the Bank’s tight monetary policy stance. Furthermore, the Bank sustained its policies in the foreign exchange market alongside further initiatives to boost supply in the market and support economic activities.
This report, therefore, presents an analysis of the developments that impacted on the financial markets during 2018 and the measures taken by the Central Bank of Nigeria towards monetary policy implementation for the achievement of desired objectives.