As the monetary policy committee (MPC) of the Central Bank of Nigeria (CBN) begins its 306th meeting on Monday, some stakeholders have urged the committee to retain existing rates.

In its 305th meeting in May, the MPC retained the monetary policy rate (MPR) at 26.5 per cent.

The committee also retained the standing facilities corridor around the MPR at +50/-450 basis points.

It held the cash reserve requirement (CRR) for deposit money banks at 45.00 per cent, merchant banks at 16.00 per cent, and non-TSA public sector deposits at 75.00 per cent.

The committee maintained a tight monetary policy since 2024 in its inflation-targeting policy stance.

Uche Uwaleke, president of the Capital Market Academics of Nigeria (CMAN), said the committee would most likely leave all policy parameters unchanged.

Mr Uwaleke said the recent increase in inflation was largely temporary and driven by external developments, particularly the spillover effects of the Middle East crisis on global energy prices and logistics costs.

According to him, unless there is clear evidence of persistent and broad-based inflationary pressures, particularly in core inflation, there will be little justification for another round of monetary tightening.

“Nigeria’s monetary conditions remain significantly restrictive, with the MPR at 26.5 per cent, and liquidity management measures already exerting considerable pressure on credit conditions.

“Monetary policy works with a time lag, meaning that previous rate increases are still filtering through the economy. Raising rates further at this stage could impose unnecessary costs on economic activity without delivering proportionate gains in reducing inflation.

“My expectation is that the MPC will retain the MPR at 26.5 per cent, maintain the current asymmetric corridor around the MPR, and leave the CRR and other policy parameters unchanged,” he said.

The Chartered Institute of Bankers of Nigeria (CIBN) projected that the CBN would retain the MPR at 26.5 per cent.

Dele Alabi, the president and chairman of the council, CIBN, made the projection in a recent interview, saying the expectation was based on the CBN’s inflation-targeting monetary policy framework and recent economic developments.

According to him, inflation has neither increased significantly nor declined sufficiently in recent months to justify reducing the benchmark interest rate.

“I expect the MPC to keep the interest rate constant and monitor developments over the next couple of months before considering any adjustment,” he said.

He said retaining the current policy stance would allow the CBN to assess evolving inflationary pressures and broader economic conditions.

He said it would also enable the apex bank to make informed decisions before introducing further adjustments to its monetary policy stance.

A group of analysts at Cordros Research said the MPC would retain its MPR at 26.50 per cent, while keeping other parameters constant.

The analysts said the mix of developments since May, with inflation tilting higher, a relatively stable naira, robust external reserves and resilient economic growth, pointed to the MPC maintaining the status quo.

“Globally, major central banks have shifted towards a wait-and-see stance, providing little impetus for a change in direction.

“Domestically, inflation remains elevated but contained, growth is robust, external reserves are at a high level, and the Naira has been relatively stable.

“We expect a bold decision from the MPC, maintaining the MPR at 26.50 per cent while keeping other parameters constant,” the analysts said. 

(NAN)