MPC to Discuss Exchange Rate Volatility, Others

CBNThe governor of the Central Bank of Nigeria (CBN), Mr. Godwin Ifeanyi Emefiele
  • MPC to Discuss Exchange Rate Volatility, Others

As recession and other challenges continue to batter the economy, the Central Bank of Nigeria’s Monetary Policy Committee will meet next Monday and Tuesday to deliberate on developments in the economy.

The bi-monthly meeting will likely see the 11-member MPC take some key economic decisions that may affect the nation’s macro-economic indicators.

These are expected to influence the direction of the economy.

Top on the agenda of the meeting is the need to tackle the biting recession occasioned by slow growth in the economy, rising inflation and the volatility in the foreign exchange market.

In a notice posted on its website, the CBN stated that the 253rd meeting of the MPC would hold by 10am on Monday and Tuesday at the corporate headquarters of the apex bank in Abuja.

Economic experts expect the MPC to begin an expansionary monetary policy by reducing the Monetary Policy Rate.

They also expect the members to take decisions that will affect the exchange rate.

“Economic recovery should be the focus of the MPC now. They should focus on pumping more liquidity into the system rather than taking it out. Inflation is currently at 18.3 per cent but it is not caused by excess liquidity in the system, it is cost push. It is time for us to address economic recovery. We need to learn from what the Bank of England did last month to address inflation,” the Chief Executive Officer, Cowry Asset Management Limited, Mr. Johnson Chukwu, said.

Speaking in the same vein, an economic analyst at EY, Mr. Bisi Sanda, said the MPC needed to address the challenge of exchange rate volatility.

He said, “The committee must address the problem of exchange rate. The CBN Governor, Mr. Godwin Emefiele, said the CBN had been giving $11bn annually to BDC operators since 2011. That is $55bn in five years. We need to ask ourselves whether the BDC operators are critical stakeholders in our exchange rate management. It is not like that in other climes.

“They need to look at how banks are committing infractions in the forex market and see how to impose sanctions. Steps must be taken to address the problems causing volatility in the exchange rate. In the past, some people were banned for life from the forex market. What are we doing now?”

The Chief Executive Officer, Financial Derivatives Limited, Mr. Bismarck Rewane, had last month said the MPC might have no other choice than to purse an expansionary monetary policy considering the state of the economy and the recent stimulus package announced by the fiscal authority.

About the Author

Samed Olukoya
CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and, with over a decade long experience in the global financial market. Contact Samed on Twitter: @sameolukoya; Email: [email protected]

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