Ahead of the two-day meeting of the Monetary Policy Committee of the Central Bank of Nigeria (CBN), which will commence today, FSDH Merchant Bank Limited has advised that the most appropriate monetary policy decision by the committees should be to hold the policy rates at the current levels.
In its report on the MPC meeting titled: ‘Considerations and policy options’, the bank stated that its position on the need to retain the rates was informed by the current economic and financial market situation in the country.
It stated: “Although there are some arguments to increase the rates, the need to provide necessary incentives for the Nigerian economy to achieve inclusive growth negates an option of a rate increase.”
The bank recalled that at the MPC meeting of July, the Monetary Policy Rate was retained at 14 per cent, with the asymmetric corridor at +200 and -500 basis points around the MPR, while the Cash Reserve Ratio and Liquidity Ratio were also left unchanged at 22.50 per cent and 30 per cent, respectively.
It added that at the meeting, the MPC announced measures to provide cheaper funding for some critical sectors of the economy to boost economic activities.
FSDH observed that in the international market, the growing trade war between the US and China had heightened global risks, which might lead to an increase in interest rates.