Monday, January 22, 2018
11.26AM/ FBNQuest Research
The monetary policy committee (MPC) would normally
be holding its latest meeting today and tomorrow in Abuja. However, the Senate
has declined to confirm the presidency’s appointments for a new deputy governor
of the CBN and members of the committee.
The meeting is therefore not expected to go ahead
although it appears in the calendar for 2018 on the central bank’s website.
There is reputational damage to brand Nigeria as a result of what we will
diplomatically term a procedural stand-off. Incidentally, we did not expect a
change in stance.
If the MPC has one shared
agenda, it is the fight against inflation. The December report probably came as
a welcome surprise (Good
Morning Nigeria, 17 January 2018).
The headline rate slowed from 15.9% to 15.4% y/y.
The committee will have
noted the modest decline in core inflation, to 12.1% y/y in December. The more
striking move, however, was the fall in food price inflation, from 20.3% to
19.4% y/y. Stubbornly high food prices are the consequence of supply-side
factors beyond the CBN/MPC’s control.
The committee no longer
shares the in-house inflation expectations in its communique or in the
statements. Our own projections have the headline rate down to around 11.0% y/y
by mid-2018 on positive base effects before picking up a little in H2. The
committee has not altered its stance since July 2016 but we now see easing
ahead in March, failing which May this year.
On this assumption of no
change, the borrowing rate for banks at the CBN ‘s SLF remains 16.00% (the
policy rate + 200bps within the asymmetric corridor) while the FGN can borrow
at +/- 13.50% at the bond auctions operated by the DMO. This is an unusual
position in any market but not a reason to change monetary policy.
- Statement on January 2018 Meeting
of the Monetary Policy Committee
- We See Headline Rate Falling Again
to 15.2% YoY in January 2018 - FBNQuest
- January 2018 MPC Meeting: Caught Between Two
- Senate Refuses to Budge on The Approval of Monetary
Policy Committee Nominees
- Personal Statement by the MPC Members at the 115 MPC
Meeting of Sep 25-26, 2017
- MPC: A Tale of Constrained Discretion
- CBN Communiqué No. 116 of the MPC Meeting – Nov
- As Expected, MPC Leaves Policy Rates Unchanged
- Little to Warrant Any Change from the MPC
- Short-Term Outlook Favours Monetary Policy Easing
- Pre-MPC Commentary - Hold Anticipated, In Line With
- Ahead of MPC Meeting: MPR to Stay Flat Ahead of
Stronger Recovery in 2018
- Nigeria – Central Bank Will Pursue Gradual Easing