- Experts Expect no Changes as CBN’s MPC Meets
Industry experts have said the Monetary Policy Committee of the Central Bank of Nigeria will be expected to leave key rates unchanged at the end of its two-day meeting starting on Monday (today).
The MPC had, at the end of its last meeting in January, retained the Monetary Policy Rate (benchmark interest rate), Cash Reserves Ratio and Liquidity Ratio at 14 per cent, 22.5 per cent and 30 per cent, respectively.
The Chief Executive Officer, Financial Derivatives Company Limited, Bismarck Rewane, said an audacious thing to do would be to reduce the interest rate.
He said, “My projection is that they will do nothing; they will just wait and see. If I was there, I would get the interest rate down by one per cent, bring the CRR down by two per cent and putting more money into the foreign exchange market. That will be a major catalyst for economic activities.
“However, I think the prudent and safe thing that we should expect is that there will be no change for now. Bringing down interest rate has a risk element.”
He said the recent increase in the nation’s oil production and price rally had helped to improve the state of the economy, adding, “Nobody should take credit for what is happening.”
The nation’s foreign exchange reserves, which hit a low of $23.89bn on October 19, 2016, stood at $30.3bn last Thursday, latest data from the CBN showed on Sunday.
The nation’s inflation, which had climbed to 18.72 per cent in January, fell for the first time in 15 months to 17.78 per cent in February.
The Chief Executive Officer, Cowry Asset Management Limited, Mr. Johnson Chukwu, said, “I don’t expect the MPC to adjust the rates because the monetary authority will not want to inject naira liquidity into the economy at this point when they are succeeding in stabilising the naira exchange rate.”
He said a downward adjustment of rates, either the MPR or the CRR, would lead to an injection of naira liquidity into the economy, adding that this would drive up demand for foreign exchange possibly to a level that the central bank would be unable to meet.
“I do not expect the monetary authority to react to the decline in inflation in February at this particular meeting.
“That, we expect, will happen probably at the May meeting when inflation would have gone down further and at that point, the naira exchange rate would have been better stabilised.”
Meanwhile, economic management leaders from the CBN and the ministries of finance, budget and national planning as well as industry, trade and investment met in Abuja over the weekend to harmonise their policy perspectives.
Speaking at the opening of the two-day MPC retreat, the CBN Governor, Dr. Godwin Emefiele, stressed the need for the country’s monetary and fiscal authorities to collaborate and harmonise standpoints so as to develop the economy rapidly.
He said the retreat came at a period when the country faced serious economic challenges, adding that finding a sustainable solution required a broadened participation of colleagues from the fiscal side.
Oil Prices Decline on Rising COVID-19 Cases
Global Oil Prices Dipped on Friday as New COVID-19 Cases Jump Globally
Global oil prices decline on Friday as the number of confirmed COVID-19 cases surged across the world.
Brent crude oil, against which Nigerian oil is priced, declined from $43.47 per barrel it traded on Thursday during the Asian trading session to $41.60 per barrel on Friday at around 11:39 am Nigerian time.
Oil traders and investors are worried that the rising number of COVID-19 new cases would disrupt demand for the commodity and force refineries to shut down once again.
“I do not suspect many oil traders will be looking to place significant bids in the market today, suggesting prices may continue to wallow into the weekend,” said Stephen Innes, chief global markets strategist at AxiCorp.
Despite efforts by both OPEC plus and other top oil producers to halt falling oil prices and reduce global oil glut, the lack of a cure for COVID-19 remained global concerns.
As previously stated on this platform, until a cure is found the world would have to find a way to either work through COVID-19 or shut down activities completely.
This is coming a day after the Federal Government of Nigeria announced that it was putting school resumption plan on hold following the latest COVID-19 report that shows Nigeria’s confirmed cases crossed 30,000 on Wednesday.
In the United States, more than 60,000 new COVID-19 cases were reported on Thursday, forcing lawmakers to start contemplating the second phase of COVID-19 lockdown.
We Are Losing N13.9bn Monthly Because FG Caps Tariff – Discos
Discos Says it is Losing N14bn Monthly Because of NERC Capped Tariff
The Nigerian power Distribution Companies (Discos) have said they a losing N13.9 billion in revenue every month because the Nigerian Electricity Regulatory Commission, limited how much they can charge for consumption.
Ernest Mupwaya, the Managing Director, Abuja Electricity Distribution Company, made the statement during a presentation on behalf of the Discos to the House of Representatives Committee on Power.
The statement was after the Discos demanded realistic indices before the implementation of the proposed service reflective tariff, which was supposed to be implemented on July 1.
Mupwaya said there were some outstanding requirements before the service reflective tariff could be implemented.
“One of them is the removal of estimated billing caps. The financial impact of the Capping Order is an average loss of N13.9bn monthly, thereby, undermining or jeopardising the minimum remittance requirement,” Mupwaya stated.
The July 1 service tariff implementation was halted by members of the National Assembly, who prevailed on the Discos to shelve the date to the first quarter of 2021 due to the current economic challenges in Nigeria.
Gbajabiamila Says Nigeria Can’t Compete in AfCFTA With Weak Industries
Nigeria Must Ramp up Industrialisation to Prevent Dumping by Other Nations
The Speaker of the House of Representatives, Femi Gbajabiamila, has said the nation can not compete effectively in the African Continental Free Trade Area (AfCFTA) with weak industrialisation and manufacturing activities.
Gbajabiamila disclosed this while receiving Adesoji Adesugba, the newly appointed Managing Director of the Nigeria Export Processing Zones Authority.
The details of the visit were made public on Thursday in a statement titled, “AFCFTA: House Speaker tasks Nigeria on industrialisation through free trade zones.”
Gbajabiamila was quoted as saying “We must act proactively so that we don’t become a dumping ground for other African nations.
“Our best option in this circumstance is to immediately set machinery in motion to ensure the effective functioning and flourishing of our export processing zones.
“We must remove all bottlenecks and perfect all stumbling blocks. We will then be fully prepared for AfCFTA and also generate massive jobs for our unemployed youths and enhance our foreign earnings.”
He added that the nation must as a matter of national emergency ramp up industrialisation through free trade zones and other effective means to compete with South Africa, Africa’s most industrialised economy and other African nations.
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