By Chioma Obinagwam
Aa the Nigeria’s central monetary authority, the Central Bank of Nigeria (CBN) and other members of the Monetary Policy Committee (MPC) put heads together at it’s 279th meeting to proffer policies that is seemingly best for the economy, some economic think tanks are envisaging a slight increase in Nigeria’s benchmark interest rate– the Monetary Policy Rate (MPR).
Cordros Research is of the view that the slight decline in headline inflation rate for the month of April, 2021, in addition to the marginal improvement in 2021 first quarter (Q1) Gross Domestic Product (GDP) figures released by the National Bureau of Statistics (NBS) on Sunday would influence the voting pattern of members of the MPC to most likely vote in favour of an increase in MPR.
“Our baseline expectation is that most members will vote for a 50bps hike in MPR. However, we do not rule out the possibility of a 100bps hike, particularly if the Q1-21 GDP numbers surprise positively,” it disclosed.
Confiance News gathered from the NBS on Sunday that Q1 2021 Real GDP grew 0.51 percent compared to 0.11 percent in fourth quarter (Q4) 2020 and 1.87 percent in Q1 2020.
Afrinvest Research seem to hold a different view. According to Afrinvest, the marginal decline in headline inflation and slight improvement in the 2021 Q1 GDP figures is not sufficient for an increase in MPR.
“With the reported decline in Headline inflation rate in April 2021, we are of the view that the MPC may have gotten a soft-landing to vote for the retaining of all monetary policy parameters during next week’s meeting. Besides, we believe the MPC’s voting pattern will also be shaped by the Q1:2021 GDP numbers that is likely to be published next week Monday by the NBS. Hence, given our projection of a maximum 2.1% y/y GDP growth in Q1:2021, we submit that the MPC may likely retain all monetary variable parameters at the end of next week’s meeting,” the analysts disclosed in their weekly report.
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