The Monetary Policy Committee (MPC) held its policy meeting on the 26th and 27th of July 2021, with all members voting unanimously to hold policy parameters constant. In reaching their decision, the committee noted the moderating inflation figures (17.75%YoY in June vs. 17.93%YoY in May) as well as the gradual recovery of the economy which reflected in improved manufacturing and non-manufacturing purchaser’s manager’s index.
Also, the committee voiced concerns about the fast spread of the new coronavirus strain, highlighting it as a key downside risk to the growth trajectory. The Committee thus urged the Presidential Taskforce on COVID-19 to ensure giant strides towards herd immunity.
In a special announcement, the Central Bank Governor stated key policy shifts in the CBN’s FX operations. The Governor made it clear that going forward, the CBN will discontinue sales of USD to Bureau De Change (BDCs) Operators and cease the issuance of new licenses to intending operators.
Thus, after carefully weighing the implications of monetary tightening and easing at this time, the committee decided to maintain the status quo. Although we expect the impact of the decision to be negligible on fixed income yields, the new development around FX could put some pressure on Naira.
Kindly use the link below to access the full report.