Experts divided over interest rate hike ahead of MPC meeting

Ahead of the two-day Monetary Policy Committee meeting of the Central Bank of Nigeria commencing on Monday, financial experts have expressed uncertainties over possible interest rate hike.

As part of its event calendar for 2023, the CBN disclosed that it would hold its 289th meeting in Abuja.

Speaking on the prospective outcome of the MPC meeting, a professor of Capital Market and Chairman of Chartered Institute of Bankers of Nigeria, Abuja Branch, Prof Uche Uwaleke, explained that the Committee would likely keep all the monetary policy parameters.

He said, “Plethora of historical evidence suggests that the MPC rarely adjusts policy rates in January due to the need to allow the markets to stabilise in the New Year.

“Also, inflationary pressure is beginning to reduce, as seen in headline inflation numbers for December 2022.

“I do not advise a further hike in MPR, as doing so beyond the current high rate of 16.5 per cent can jeopardise economic growth.”

However, researchers at Cordros Securities expect a rate hike after the meeting.

In a report, the group of experts explained that MPC might toe the line of their global counterpart to introduce a small interest rate hike.

“Looking elsewhere, the prospect of global Central Banks embarking on smaller interest rate hikes could also influence the MPC’s decision to toe the same line amid concerns about the domestic economy”, they stated.