The Central Bank of Nigerian, CBN, Monetary Policy Committee scheduled next week to decide on interest rates is unlikely to hold as a result of delay in approval of new committee members.
The development followed the failure of the Nigerian Senate to approve the appointment of at least five new MPC members, which means the committee will probably not be able meet to discuss policy decisions, or make an announcement on interest rates on Jan. 23.
Chairman, Senate Committee on banking, Rafiu Ibrahim told Reuters news agency that: “We are not considering the confirmation” of the MPC members. The senate has an issue with the executive. Anything to do with a confirmation will not be considered.”
The MPC has kept the key rate at a record high 14 percent since July 2016, trying to balance bringing down inflation and boosting an economy that exited recession last year. While inflation is at the lowest in 20 months, all but one of the 11 economists in a Bloomberg survey forecast the committee will still keep policy unchanged.
CBN Governor, Godwin Emefiele said earlier this week that he was “very hopeful” that the meeting will take place as scheduled. The MPC currently meets six times a year, while the Central Bank Act requires the committee to gather only a minimum of four times per year.
In case the meeting doesn’t take place in January “we will just have a few weeks postponement,” he said.
Emefiele said he expected the MPC to keep the monetary policy rate unchanged. That means market reaction to the delay would be muted, said Joe Delvaux, a money manager at Duet Asset Management Ltd. in London.
“It won’t change investors’ positioning in the market much, but it would put into question the political impact on Nigeria’s institutions,” he said. “One could ask the question of how it is even possible to end up in a situation where the monetary policy of a country can’t be enacted due to too many MPC seats being empty.”
