Based on past its policy antecedents, economists at CAPE Economic Research and Consulting, a leading economic analytics firm, have projected that Monetary Policy Committee (MPC) of the Central Bank of Nigeria may sustain its hawkish monetary policy stance at its next meeting in February this year.
The researchers, who made the projection in the firm’s ‘Economic Newsletter, Vol 4, Issue 1, January 2025’ circulated to our correspondent, recalled that the MPC adopted a tightening stance during its November 2024 meeting, raising the monetary policy rate by 25 basis points to 27.50 percent.
According to the analysts, the decision underscored the dual mandate of curbing inflation and maintaining Nigeria’s attractiveness in the foreign portfolio investment (FPI) market.
They noted further, however, that ensuring stability in the foreign exchange market necessitated robust fiscal interventions that complemented apex bank’s monetary policies, particularly those aimed at attracting foreign direct investment (FDI) and fostering export growth.
To achieve this, they advocated that the government’s initial priorities should include strengthening the oil sector, followed by a deliberate strategy to diversify the economy.
On the benchmark lending rate by the MPC at its next meeting, the experts predicted: “Looking forward, the MPC is likely to maintain its tightening trajectory during its February 2025 meeting, which will shape the monetary policy outlook for the year.
“The Committee may opt to retain the policy rate at 27.50 percent or implement a marginal increase to enhance its inflation-fighting buffer”, they added.
