The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) is expected to hold its first meeting of 2023 on the 23rd and 24th of January. Many analysts believe that the Committee remains faced with either maintaining its hiking cycle or keeping policy parameters unchanged.
“Therefore, we expect the Committee to assess the domestic and global economic environment in the context of developing key economic and financial indicators since its last policy meeting in November,” said analysts at Cordros Securities in a note seen by THEWILL.
The team further said, “In our view, the MPC is likely to be concerned about the pressure on the domestic economy, given the slow growth recorded in Q3-22, more so that the manufacturing sector posted its first contraction since Q4-20.
“Moreover, inflationary pressures remain intact, although the slight ease in December will likely be welcomed among the Committee members.”
Elsewhere, the prospect of global central banks embarking on smaller interest rate hikes could also influence the MPC’s decision to tow the same line amid concerns about the domestic economy.
“Thus, we expect the MPC to opt for smaller rate hikes in the short term, given the build-up of pressures in the local economy and as the risks of over-tightening come to the forefront of policy discussions.
“Consequently, we expect the Committee to increase the MPR further by 50bps – 100bps and retain other policy parameters,” Cordros stated.