Dear Subscriber,

The MPC made a surprise move in cutting the policy rate at yesterday’s meeting from 14% p.a to 13.5% p.a.

It said it was a signal of a shift towards a more accommodative stance. The Justification for the move was the existence of adequate external buffers, a strengthening currency, and mild inflation.

The markets have not reacted to the move because of the contradiction between  rate easing on the one hand and a simultaneous retention of a choking CRR rate of 22.5% on the other. This means that monetary conditions will remain tight.

The CBN continues to adopt inflation targeting as its policy framework and using the MPR as its anchor. The current move is coming late and is unlikely to have the desired impact of boosting lending to the private sector and serving as a catalyst for growth.

The attached slides were used by Bismarck Rewane on the channels TV news at 10 programme yesterday.

Do enjoy your read…