March 7, 2025/InvestmentOne Report

The Monetary Policy Committee (MPC) meeting that was held in February resulted in a hold decision, as committee members unanimously decided to halt the aggressive rate increases seen in the past year. Hence, the Monetary Policy Rate (MPR) was left at 27.50%, the asymmetric corridor around the MPR remained at +500/-100bps while the Cash Reserve Ratio (CRR) for commercial and merchant banks stayed at 50.00% and 16.00% respectively. Elsewhere, the liquidity ratio was retained at 30.00%. We highlight that this decision was influenced by the progress made so far with monetary policy, as seen from the relative stability and considerable appreciation of the Naira and general slowdown in consumer prices amid moderating energy costs.

Looking forward, we expect bullish sentiment to continue to prevail in the month of March as buying interest from investors persist amid expectations of a sustained decline in inflation, which should put downward pressure on general interest rate levels. Thus, we expect rates in the primary market to print lower even as the local debt market remains the major source of borrowing for the federal government, while the secondary market yields are also expected to follow suit.

However, we envisage that the bullish momentum in the market should be moderate given the need to keep interest rates at attractive levels for foreign investors to avoid notable capital outflow from the domestic economy. Kindly find HERE, the full report, covering our analysis and considerations.