Likely issues the committee will deliberate on when it meets include the new naira notes and the deadline of January 31, the inflation rate, economic growth and implication of election spending on the currency in circulation, among others.
At the 288th MPC meeting held on Monday and Tuesday November 21 and 22, 2022, the MPC resolved to raise the benchmark interest rate, the Monetary Policy Rate (MPR) to 16%, retained the asymmetric corridor at +100/-700 basis points; retained cash reserve ratio (CRR) at 32.5%, while the liquidity ratio was retained at 30%.
Nigeria’s headline inflation eased to 21.34% in December 2022. In spite of this, analysts still believe it is too high for a nation whose minimum wage is just N30,000. The high inflation rate is seen as a major concern to policy makers at the CBN.
“Although the December inflation decelerated, the cost of living, no doubt, remains high. Inflation averaged 18.8% in 2022, the highest since 1992. The CPI has grown by around 82% since the last minimum wage of N30, 000 was announced. This implies that in naira terms, a consumer that received N30,000 today is only receiving a real income of N5,400 relative to the value of the same amount received in 2019. Also, in the past year, the price of rice, yams, and bread has increased by 27%, 70%, and 50%, respectively. This implies that consumers are living on edge. With stagnant wages and rising costs of living, deprivation and desperation are currently at an all-time high.
“As inflation tapered in December and growth remains tepid, most analysts are betting that the MPC will become less hawkish when they meet later this month. With the general election scheduled to hold in less than 40 days amid rising uncertainty, the odds in favour of maintaining the status quo in the next MPC meeting are high,” analysts at the Financial Derivatives Company (FDC), said in a note to investors.
