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Analysts Applaud MPCs Decision On Rates

By on January 22, 2013

The Monetary Policy Committee (MPC) decided to leave the Monetary Policy Rate unchanged at 12% when they met in Abuja yesterday.

The decision makers are of the opinion that the $79 oil benchmark poses an inflationary threat of the economy, and a reduction in the key lending rate would have amplified the damage to the economy if implemented.

Head, Africa Research, Standard Chartered Bank Group, Ms. Razia Khan said, “In all, we believe this was a good and measured decision, weighing up the differing economic risks faced by the Nigerian economy.

“The naira should continue to receive support from the current level of interest rates, while issuance plans and offshore appetite for Nigerian debt will remain key drivers of bond yields.”

Also speaking on the development, the Managing Director of Financial Derivatives Company, Mr. bismarck Rewane said, ”

“The MPC behaved true to type and left the benchmark interest rate at 12 per cent after the first meeting of 2013. The CBN has adopted a monetary policy framework of implicit inflation targeting, with the interest rate as its nominal anchor.

“It has also implemented its strategy using the discretionary rule. This means the CBN is proactive and is more aggressive in the execution of its strategy of maintaining price stability. Even though it talks of inflation targeting, the CBN’s body language reveals a near obsession with maintaining a strong naira with a tendency towards overvaluation.”