Overview

The Monetary Policy Committee in its second meeting for the year raised the benchmark rate by 200bps, bringing the MPR to 24.75%, in line with our expectations of a 100-200bps hike. This decision further reinforces the CBN’s commitment to reining in inflation and achieving stability for the Naira. In line with our expectations for the year, higher rates are here to stay.

The CBN seems to be achieving results in restabilizing and reinstating confidence in the FX market through its recent reforms as the Naira significantly appreciated by 21.82% by the end of March. Concerns, however, is how far the CBN is willing to go in its defense against the Naira if the supply constraints, especially from oil receipts are not fixed in the long term.

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