Monetary Policy Committee Meeting Starts Today

Weakening exchange rate, rising non-performing loans in the banking industry and other key economic issues are expected to top the agenda as the Monetary Policy Committee of the Central Bank of Nigeria begins its two-day meeting today (Monday).

According to economic and financial experts, the meeting will see the 11-member MPC deliberate on how to improve on the fragile growth the economy recorded in the second quarter.

The economy had exited recession in the second quarter of this year, having recorded 0.55 per cent Gross Domestic Product growth rate, according to the National Bureau of Statistics.

Analysts had attributed the 0.55 per cent growth recorded in the second quarter, the first positive growth in the last six quarters, to improvement in the price and crude oil output.

They emphasised the need for a growth rate higher than the rate of increase in the country’s population.

“The MPC will deliberate strongly on the slight weakening of the naira being recorded in recent times; they will also discuss the rising non-performing loans in the banking industry and how to reduce it; they will look at how to improve liquidity in the economy,” an economist and the Managing Director of Cowry Asset Management Limited, Mr. Johnson Chukwu, said.

Chukwu, however, posited that the MPC would not adjust any of the key rates such as the Monetary Policy Rate, Cash Reserve Ratio and the Liquidity Ratio.

He added, “They will not adjust any of the key rates because they will not want to do anything that will jeopardise the economic recovery we are witnessing. They will not want to adjust the MPR because the marginal decline in inflation can be affected.

“At the same time, they will not want to touch other rates in order not to affect economic recovery.”

An analyst and Director, Union Capital Limited, Mr. Egie Akpata, said the committee would likely look at how to improve the economy in the post-recession era, taking into cognisance oil price and other issues.

However, he stated that the MPC might not adjust any of the key rates, due to the state the economy at the moment.

Akpata said, “There is no basis for reviewing any of the key rates for now. The inflation is still where it is. The little declines we have seen, to me, are statistical errors because they are very negligible. So the MPC may not adjust anything.”