An outlook for the next Nigerian MPC meeting - CNBC Africa

An outlook for the next Nigerian MPC meeting

Western Africa

by Dara Rhodes 0

Voting will be centred around three main issues; how to tackle liquidity going forward and most importantly, the naira. PHOTO: Getty images

As the country has experienced a bout of turbulent and challenging macro-economic and market conditions, the forecasts about the outcome of the Monetary Policy Committee (MPC) meeting that is in less than two weeks has generated a lot of interest.

Nigera’s inflation is expected to slightly rise to 8.2 per cent from 8 per cent in December of 2013, and 7.9 per cent in November.

“First of all, the committee members this time will be without Sanusi Lamido Sanusi, without John Osilaja and without Tunde lemor so I think voting will be centred around two main issues; how to tackle liquidity going forward and most importantly, the naira,” Usoro Essien, Head of Research at Greenwich Trust told CNBC Africa.

Essien believes that these are crucial issues because an increase in liquidity levels going into Q2 and the rest of the year is still expected. He is also certain that as the naira breached its plus or minus three per cent band under 155 it needs to be addressed too.

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“What they would want to actually try and check is if this demand is fundamentally driven, if there are actually people that are engaging in economic activities,” he said.

“Right from the introduction of RDAS, there have been some restricting measures to ward off speculative demand but at the same time,” he explained.

According to him, the naira needs to ease a bit to a level that would reduce the costs the federal government is spending as the risks are too high.

“Last year the demand was like 29 billion US dollars and that’s like 52 per cent higher than what we sold last year. Don’t change the exchange rate itself but increase the band around it so plus, minus three per cent, we can easily take that to ten. The issue is stability,” he added.

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