Financial analysts have predicted that the nation’s inflationary rate will continued to trend downward in this current financial year. But they disagreed on whether it will remain on single digit or double digit before the end of the year. The FSDH research group said that the need to curb high inflation rate and maintain stability in the foreign exchange market were the main reasons for the contractionary monetary policy. The group expected that the inflation rate may drop to single digit mid-year, while the exchange rate should remain stable in the short-term. The group supported the idea that there is need for monetary policy easing to boost credit creation and stimulate economic growth.
FSDH said that looking at the short-term outlook of the Nigerian economy, the MPC should begin monetary policy easing to signal the end of its monetary policy tightening cycle. According to the analysts at FSDH, “the short-term outlook of the Nigerian economy favours monetary policy easing in order to stimulate credit creation and economic growth. The easing may be in the form of an adjustment to the Monetary Policy Rate (MPR) or an adjustment to the Cash Reserve Requirement (CRR).”
Although the Central Bank of Nigeria (CBN) has scheduled the first meeting of the Monetary Policy Committee (MPC) in the year 2018 for April 03 and April 04, 2018, they said at MPC November 2017 meeting, the committee maintained the MPR at 14 per cent, with the asymmetric corridor at +200 and -500 basis points around the MPR; retained the CRR and Liquidity Ratio (LR) at 22.50 per cent and 30 per cent respectively. The Afriinvest West Africa Limited on the other hands, expected that the disinflation trend to continue in the near term, estimating a further moderation in Year-on-Year inflation to 13.4 per cent in March and revising year end forecast to 11.2 per cent from 12.3 per cent.