Monetary Policy | |
Monetary Policy | |
1547 VIEWS | |
![]() | |
PROSHARE | |
PROSHARE |
Thursday,
March 26, 2020 /06:44 AM / By FDC / Header Image
Credit: FDC Ltd
In an unexpected move, Nigeria's MPC decided to keep
its benchmark interest rate unchanged at 13.5%p.a. Analysts were almost
unanimous in their opinion that the committee would cut rates by 50 to 100bps
as a way of complimenting the fiscal stimulus required to avert a recession or
at best reduce its potential impact.
The market reading of this policy stance is that the
CBN is tacitly accepting the limitations of monetary policy tools in times of
macro-economic turbulence. It also is trading off some of its interest rate
ammunition to reduce a continued hemorrhage of FPIs (hot money) from an
external reserves position that is continuously depleting.
Related Link: The
Limits of Heteredox Economics Revealed, MPC Trapped and Has to Hold
Our view of the duration of crisis is mild to moderate
with a possible increase in the number of infected in March and April before
containment and reduction in the month of May. We are of the opinion that there
is a 45% probability of negative GDP growth in Q1 and Q2 before a mild recovery
in Q3.
Below, you will see the slides of a discussion by
Bismarck Rewane on Channels TV News at 10pm yesterday in which he reviewed the
immediate and wider implications of the pandemic on the Nigerian economy and
the markets.
Related News - Monetary Policy
Related News - #Coronavirus