July 25 (Lagos) - The monetary policy committee of the Central Bank of Nigeria announced their decision to increase its key benchmark lending rate to 18.75% an increase of 25 basis points.
They also retained the CRR at 32.50%, Liquidity ratio at 30.00% and adjusted the symmetric corridor to -300/+100 basis points from -700/+100 around the MPR.
CBN had to walk a fine line as in to not raise the rate sharply at the same time not look like it did nothing to fight inflation. The truth about the inflation situation now is that it may not be under their control anymore as external factors affect the price of food like Wheat and Rice.
Bonds Outlook: With the MPC’s recent decision to hike the MPR by 25bps, the enforcement of the LDR (Loan to Deposit ratio) across deposit money banks, and the intention to tighten liquidity further, analysts at
AIICO Capital in V.I. expect the bonds market to react with mild selling interest. However, the anticipated FAAC inflows should dampen the increase in market yields in the interim.
The interest rate hike had little effect on the currency exchange rates. FMDQ’s I & E rate gained 62 kobo today as it closed at $/N 791.42, compared with $/N 792.04 recorded yesterday. The NAFEX rate settled at $/N 787.16 as of July 24, 2023.
reporting for easykobo.com on Tuesday, July 24 2023 from Lagos, Nigeria