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Experts Conflicted Over Interest Rate Hike Ahead Of MPC Meeting

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Just as the management of the Central Bank of Nigeria, CBN, is set to host a two-day Monetary Policy Committee, MPC, a meeting penciled to hold today, financial experts are at loggerheads over the threat posed by the uncertainties that may result from the interest hike. As part of its annual rituals for the apex bank, it has slated today for its 289th Annual General Meeting for the year 2023 in Abuja, Federal Capital Territory, FCT, to discuss the way forward.

Making some analysis on the possible outcome of the meeting, a professor of Capital Market and Chairman of Chartered Institute of Bankers of Nigeria, Abuja branch, Prof Uche Uwaleke, explained that the committee may likely keep all the monetary policy parameters. 

According to Uwaleke, “Plethora of historical evidence suggests that the MPC rarely adjusts policy rates in January due to the need to allow the markets to stabilize in the New Year. 

“Also, inflationary pressure is beginning to reduce, as seen in headline inflation numbers for December 2022. 

In his opinion, he revealed, “I do not advise a further hike in MPR, as doing so beyond the current high rate of 16.5 percent can jeopardize economic growth.” 

However, researchers at Cordros Securities speculate that a rate hike after the meeting may like come up. 

In a report, a group of experts in the financial sector speculates that the MPC may toe the line of its global counterpart by introducing a jacking up of the interest rate. 

The group said, “Looking elsewhere, the prospect of global Central Banks embarking on smaller interest rate hikes could also influence the MPC’s decision to toe the same line amid concerns about the domestic economy”,