The National Bureau of Statistics (NBS) is expected to release the GDP numbers tomorrow and the headline inflation data for August 2013 on September 17, one week ahead of the MPC meeting this month. FDC is forecasting that headline inflation will remain unchanged at 8.64%. This will mean that the CBN will take some comfort in the numbers, which suggest that the CRR increase may be working.

The initial impact of the increasing CRR on public sector funds on average NIBOR was 21%p.a and subsequently stabilized at 14.25%p.a. This shows the lingering effect of the quarantined N1trn from banks’ books.

However, the value of the naira which is the primary objective of the monetary policy stance in July is coming under severe speculative pressure. In the parallel market the naira is now trading at N164 to a dollar. Therefore, the CBN may need to take another look at the monetary policy objective of keeping the naira at its current level.

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Source: FDC