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.