Strong indications emerged on Sunday that the 294th meeting of the Central Bank of Nigeria (CBN)’s Monetary Policy Committee (MPC) slated for between November 20th and 21st, 2023, going by the apex bank’s calendar may not be held this week.
Owing to this, some financial market analysts and market participants have expressed concerns over the likely implications on the market.
On the MPC meeting, apart from the fact that there was no official announcement of the meeting on the apex bank’s website, sources also confided in THISDAY on Sunday that the MPC was unlikely to meet as scheduled.
This would be the second consecutive time that the MPC meeting would be skipped since the CBN Governor, Mr. Olayemi Cardoso formally assumed office on September 22, 2023 – three days to the 293rd MPC which was scheduled between September 25 and 26 – and failed to hold.
The inability of the central bank to convene the MPC meetings under its new leadership has continued to generate concerns among analysts and stakeholders amid the current galloping inflation partly fuelled by the removal of fuel subsidy, FX liquidity challenges, and the increasing cost of funds in the economy among others.
Analysts who spoke to THISDAY said the development may convey mixed signals to both local and foreign investors regarding the policy direction of the government.
Managing Director/Chief Executive, SD&D Capital Management Limited, Mr. Idakolo Gbolade, said the inability of the CBN to hold the meetings so far may send mixed signals to both local and foreign investors regarding the direction of the economy.
He said, “The MPC meeting is the official policy direction platform to project the monetary policies of the federal government through the CBN and its positions on economic issues go a long to determine various positions taken by critical stakeholders in the economy.
“The inability of the CBN to hold the meeting so far might send mixed signals to both local and foreign investors as regards the policy direction of the economy.
“Although the CBN has been communicating its policies in the past couple of weeks, the MPC meeting is critical and should be held regularly. If the new CBN Management team fails to hold its maiden MPC meeting this week, it could cause anxiety in the economy.”
On his part, Wealth Management and Business Development Consultant, Mr. Ibrahim Shelleng, said the lack of clear guidance on interest rates, inflation targets, and other monetary policies may result in market volatility and reduced investor confidence.
He said regular MPC meetings play a crucial role in providing a framework for economic decision-making and maintaining stability.
He told THISDAY, “If the Central Bank of Nigeria fails to hold regular MPC meetings, it could lead to increased uncertainty in the investing public. The lack of clear guidance on interest rates, inflation targets, and other monetary policies may result in market volatility and reduced investor confidence.
“Additionally, the absence of timely policy adjustments in response to economic changes could impede the central bank’s ability to effectively manage inflation, exchange rates, and overall economic stability. In the long run, this could have negative repercussions on the economy, hindering sustainable growth and development.
“However, it should also be noted that Mr. Cardoso resumed office at the tail end of September, and given the multitude of economic issues faced by the country, he may have stalled on holding MPC in order to align with fiscal policy so as not to send mixed signals to the investing public.
“I suspect that MPC may be delayed further until there is a clear indication of the direction of government spending in the 2024 budget.”
On September 21, the CBN had announced the postponement of its 293rd meeting till further notice.
The meeting was initially scheduled for Monday and Tuesday, September 25 and 26, 2023, respectively. In a statement issued by CBN Director, Corporate Communications Department, Dr. Isa AbdulMumin, the bank had said a new date would be communicated in due course.
However, in an interview with THISDAY, Managing Director/Chief Executive, Dignity Finance and Investment Limited, Dr. Chijioke Ekechukwu, cautioned the MPC against making hasty policy pronouncements.
He said, “My question is, what value did the quarterly meeting of the past dispensation add to the economy? Those quarterly pronouncements of the CBN were putting pressure on the financial sector. They need to examine themselves well enough before coming to make pronouncements.
“Many factors are contributing to the macroeconomic headwind, most of these factors do not have monetary policy solutions and therefore not controlled by CBN. Holistic solutions must be sought in arriving at economic solutions.
“The U.S, Eurozone, China, and other developed economies are experiencing a major drop in their inflation rates, while Nigeria’s inflation rate continues to increase month on month irrespective of measures taken by the apex bank.”
James Emejo and Emmanuel Addeh in Abuja