- OMO Policy: Stockbrokers Scare of Possible Reversal
Stockbrokers across the country are worried the Central Bank of Nigeria (CBN) may reverse the ongoing Open Market Operations (OMO) policy to ease inflation pressure.
The CBN led monetary policy committee had increased cash reserve ratio by 500 basis points on Friday to 27.5 percent to contain rising inflation rate amid projected surge in money in circulation.
Chief Oyinyechukwu Ezeagu, the Chairman, Association of Securities Dealing Houses of Nigeria, urges the Federal Government to sustain the OMO policy to better support the Nigerian Stock Exchange market.
He said, “It is too early to celebrate that the current rally in the stock market because of sustainability. Our concern is always policy uncertainty in Nigeria as this has been a major drag to the growth and development of the economy and, by implication, the capital market.
“The new policy on OMO is making investment in the market more attractive but the question is sustainability. We operate in an unpredictable environment where there can be policy somersault at the least expected time.”
According to Ezeagu, the OMO policy was one of CBN financial strategies to compel the Deposit Money Banks to increase credit facility to the real sector of the economy and ensure local investors focus on investing in the economy.
He added that, “Banks should lend money to the real sector to enhance economic growth and development. With a real Gross Domestic Product growth at 2.10, 2.12 and 2.38 per cent in Q1, Q2 and Q3 2019 and a population growth 2.6 per cent, Nigeria’s economy is struggling to find its bearing.”