There are indications that the Monetary Policy Committee of the Central Bank of Nigeria may not increase the benchmark lending rate in the next MPC meeting.

Analysts, who spoke with our correspondents in separate interviews on Friday, said that most of the variables would be maintained. However, they said the Monetary Policy Rate could be slightly adjusted.

According to the Executive Secretary and Chief Executive Officer, Financial Market Dealers Association, Mr. Wale Abe, there is still need to be watchful of the inflation rate.

He said, “Most variables are likely to remain unchanged. The MPR should be left untouched too but if at all there will be a change in the MPR, it would be a marginal change. There’s much pressure from the real sector, and even the financial sector.

“They have been lamenting about credit squeeze in the economy. So, that may call for a change but the change should be minimal.”

Also, analysts at First Security Discount House Limited, in a report made available to our correspondent on Friday, said the MPC would likely maintain rates at the current level.

The report said, “We expect a relax monetary policy at the March 2013 meeting of the MPC. However, we think the MPC will maintain rates at the current level on Monday. In our opinion, the yields in fixed income securities have dropped from the levels recorded a few months ago on account of the positive macroeconomic environment, and expectation in some quarters of a possible reduction in MPR in January.

“Our outlook on external reserves in 2013 is positive based on good oil price and improved oil production. Our forecast to end year 2013 is $51bn. This will further support a stable exchange rate, although our inflation projections for 2013 point to a single digit figure, starting from January 2013.”

It, however, said the MPC might be constrained at the meeting to cut rate because of double digit inflation rate reported for December 2012 and the fact that core inflation rate was still very high at 13.7 per cent.

The analysts pointed out that the CBN should be able to meet any fund repatriation by the foreign portfolio investors from the robust external reserves.

The MPC at its meeting of 19th and 20th November 2012 resolved to sustain monetary policy tightening. Consequently, the MPR was retained at 12 per cent, the Cash Reserve Ratio retained at 12 per cent and liquidity ratio retained at 30 per cent.

Source: Punch (written by Ademola Alawiye)