Post-MPC May 2021: Status Quo Justified but Economy Still Shackled

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Thursday, May 27, 2021 / 11:18 AM / by FDC Ltd / Image Header Credit: FDC Ltd

 

The decisions taken at monetary policy committee meetings are not as important as the guidance. Decisions are based on historical indicators whilst guidance are a signpost to the future. Yesterday's decision to maintain status quo at the Nigerian MPC Meeting was seen by some as a ritual, whilst economists were gladdened by the courage of the policymakers even though belated to adopt a reform oriented forex rate determination mechanism.


The delayering of the multiple exchange rate system which had bedeviled the Nigerian economy had been a subject of controversy for a long period. Now that it appears settled we should expect a crawling peg method and an increase in forex supply to ensure equilibrium in the market.


That notwithstanding the CBN's attempt to mop up excess liquidity could serve as a temporary antidote to consumer price inflation which still remains stubbornly high (18.12%).


In the slides and video link below, Bismarck Rewane carried out an insightful analysis on the recently concluded MPC meeting on the Channels television news at 10pm program.


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