As expected, the Monetary Policy Committee left the policy interest rate (MPR) and other parameters unchanged. At 14 percent, the MPR has been left unchanged for the 10th consecutive period1; likewise the CRR at 22.5 percent, Liquidity Ratio at 30.0 percent; and Asymmetric corridor at +200 and -500 basis points around the MPR. All except one member of the MPC agreed to keep rates on hold, mainly in anticipation of a more precise direction of key macroeconomic indicators, including the passage and implementation of the 2018 budget. Complementary factors considered for the hold also points to the current moderation in inflation rate towards single digit, as well as higher reserve levels
Macroeconomic Report & Economic Updates
Crude Oil Price: Crude oil price attained a historical low of $30.7 in January 2016 largely due to excess global oil supply. Crude Oil Production and Export: Oil production has continued to fall in
Business activities in Africa slightly improved in February 2017 albeit at a slow rate. Sales Managers Index (SMI) for Africa an assessment of business condition in Pan-African Economy increased by 0.4 index points from 52.2 points in January 2017 to 52.6 points in February 2017. Sub-Saharan African countries experienced better business activities than North Africa in the review period. The two largest economies in the region, Nigeria (48.5 index points) and South Africa (49.2 Index points) registered contraction in the review period as Nigeria remained in recession while high unemployment remained a problem in South Africa. The growth in SMI recorded in the review period is driven by improvement in business confidence and sales price which outweighed the fall in other components market growth, sales output and staffing level.
Recent data from the National Bureau of Statistics (NBS) shows that the value of capital imported to Nigeria declined by 54.34 percent; from $1.56 billion 2015Q4to $710.97 million in 2016Q11. This is the lowest value since the data was first released in 2007. Huge declines in Portfolio Investment (71.54 percent) and other Investment (44.84 percent) were the major drivers of the trend within the period. A myriad of factors have contributed to the decline in investments. The plunge in crude oil prices, and the resultant negative signals on investors confidence, was a key factor. This was exacerbated by the FOREX restrictions and delays in the assentation of 2016 Appropriation Bill. While the slight increases in oil prices and the recent signing of the budget into law could improve the general economic prospects, monetary authorities need to proffer solutions to the negative effects of the current FOREX restrictions on investments.