At the last meeting of the MPC held on March 23/24, committee members unanimously voted in favor of keeping the monetary policy rate unchanged at 13.5%p.a. The rationale behind the decision was on the need to fully evaluate the impact of its recent regulatory measures. The move bucks a global trend of monetary easing to mitigate the impact of the Covid-19 outbreak on financial markets, the oil market and economic activities.
The MPR is an anchor rate that pulls all other interest rates in the market. The implication of this move is that the decision to maintain status quo when countries are lowering interest rates is likely to increase capital inflows in Nigeria as a result of higher interest rate differential relative to advanced countries.
In this bulletin, the FDC Think-Tank analyzes the implications of the MPC’s decision on the economy.
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