Post MPC – MAY 2021 (Re : Status quo justified but economy still shackled!)

Dear Subscriber,

The decisions taken at monetary policy committee meetings are not as important as the guidance. Decisions are based on historical indicators whilst guidance are a signpost to the future. Yesterday’s decision to maintain status quo at the Nigerian MPC meeting was seen by some as a ritual, whilst economists were gladdened by the courage of the policy makers even though belated to adopt a reform oriented forex rate determination mechanism.

The delayering of the multiple exchange rate system which had bedeviled the Nigerian economy had been a subject of controversy for a long period. Now that it appears settled we should expect a crawling peg method and an increase in forex supply to ensure equilibrium in the market.

That notwithstanding the CBN’s attempt to mop up excess liquidity could serve as a temporary antidote to consumer price inflation which still remains stubbornly high (18.12%).

In the slides, Bismarck Rewane carried out an insightful analysis on the recently concluded MPC meeting on the Channels television news at 10pm program.

Do enjoy…