July 23, 2024/Coronation Research
Twelve (12) members of the committee were in attendance.
MPC Decision
- MPC hiked by +50bps to 26.75%.
- The asymmetric corridor of the MPR was adjusted to +500bps /-100bps from +100bps / -300bps.
- CRR for commercial banks retained at 45%.
- CRR for merchant banks retained at 14%.
- Retained liquidity ratio at 30%.
In line with our forecast of a rate hike within a range of +50bps to +100bps, the MPC hiked the benchmark policy rate by +50bps at its July meeting
The committee noted that the recent accretion in external reserves would further bolster confidence in supporting exchange rate stability. On that note, the committee urged banks to explore available avenues to improve FX inflow, particularly through diaspora remittances.
On a separate note, the committee recognized efforts by the FGN and private sector to enhance Nigeria’s domestic refining capacity. This is expected to ease FX import bill, by reducing FX related expenses on imported refined petroleum products.
The committee reaffirmed its commitment to continuously monitor development in both domestic and global economies to guide policy decisions and ensure that inflation expectations are adequately anchored.
We note that the MPC reemphasized its commitment to continue its tightening cycle in response to ongoing inflationary pressures.
Regarding FX market dynamics, since the last MPC meeting held in May ‘24, the NGN/USD depreciated marginally by -1% in the NAFEM window, closing at N1500.3/USD (as at 22, July ’24).
On banking sector stability: The committee noted the sustained resilience of the banking system reflects improvement of key financial soundness indicators.
On recapitalization: The committee further encouraged the continued need for close monitoring of the banking system as the implementation of the recapitalization exercise progresses.
The next MPC meeting is scheduled to hold on 23rd and 24th of September ‘24.
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