Highlights

Citing the need to curb inflation and improve FPI flows, the Monetary Policy Committee (MPC) yet again raised the Monetary Policy Rate (MPR) by 200bps at its 294th meeting and second meeting for the year. Also, the committee decided to adjust the asymmetric corridor to +100/-300 basis points around the MPR, from +100/-700 bps previously, while raising the Cash Reserve Ratio (CRR) of Merchant Banks to 14% from 10%. The committee however retained the liquidity ratio at 30% and the CRR of Deposit Money Banks (DMBs) at 45%.

In Summary:

—> Monetary Policy Rate: 24.75%.

—> Asymmetric Corridor: +100/-300 basis points around the MPR.

—> CRR: 45.00%.

—> Adjust CRR of Merchant Banks from 10% to 14%.

—> Liquidity Ratio: 30.00%.

Expected Impacts

The fixed-income market is gaining appeal as yields are on the rise. Consequently, more investors may shift away from equities towards the more attractive fixed-income options. However, positive corporate actions and disclosures, particularly from major banks will likely support bullish sentiments in the near term. Again, we are beginning to see some improvement in FPI participation, albeit minimal, and we believe this may further support market activities.

Click here “March 2024 MPC Decision – The Need to Curb Stubbornly High Inflation Continues” to view the full report.

Thank you.