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Financial market analysts have predicted that the Central Bank of Nigeria’s (CBN) Monetary Policy Committee (MPC) will maintain its restrictive monetary policy stance in 2014.
In addition, they also forecast that inflation rate would remain within a single digit band through the first quarter of 2015.
The MPC had maintained a tight monetary policy stance over the past 13 quarters. The committee’s policies have however helped stabilise the value of the naira thereby spurring huge flows of Foreign Portfolio Investment (FPI).
A report by BGL Securities Limited which stated this, also argued that the outlook for the global economy was positive with higher growth expectation this year.
“Stable exchange rate is conditioned on the CBN’s commitment to ensuring the same,” it added.
Continuing, the report stated that in 2014, “when the effects of additional electricity power generation are brought online supported by improvement in transmission; improved performance of the non-oil sector would support the effectiveness of the socioeconomic reforms for inclusive growth. Hopefully, political activities ahead of 2015 would not overshadow policy implementation.”
In 2013, the money market was characterised by significant stability and response to liquidity dynamics through the first half of the year. The market however became volatile at the end of July through August and September with interbank rates rising to 42 per cent in September.
The volatility in short-term interest rates at that time was caused by liquidity dry up in the banking system as a result of the combined effects of a few actions. These included the withdrawal of almost N1 trillion of public sector deposits from the banking system via the 50 per cent Cash Reserve Requirement on public sector deposits, remittance of AMCON charges, amongst others.
Nigeria’s real Gross Domestic Product (GDP) increased to 6.81 per cent in the third quarter of the year, compared to 6.18 per cent in the previous quarter, the National Bureau of Statistics (NBS) had said. The NBS had stated that the GDP growth in the third quarter was helped by increased output in the non-oil sector as supply disruptions continued to hamper output in the oil sector.
“With the deteriorating performance of the oil sector mainly due to the high incidence of crude oil theft and pipeline vandalism, we are of the opinion that the oil sector might be a drag to the achievement of the NBS 2013 growth forecast of 6.75 per cent. Hence, the onus is on the government to be more assertive in its battle against this mayhem,” the BGL report added
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