CBN likely to keep policy rates on hold

The Central Bank of Nigeria (CBN) is likely to keep the monetary policy rate on hold at 13% in its 23-24 March Monetary Policy Committee (MPC) meeting. 

Standard Charterd notes its expectations as follows:

• We expect it to maintain the standing deposit facility rate at MPR-200bps and standing lending facility rate at MPR+200bps. 
  
  
• The cash reserve requirement (CRR) on private- and public-sector deposits will probably be held steady at 20% and 75%, respectively.
  
  
• Given that Nigeria will hold presidential elections on 28 March, only four days after the MPC meets, a shift in the formal monetary policy stance seems unlikely.
  
  
• Inflation has increased only marginally in recent months (8.4% y/y in February),but may pick up further and possibly reach low double digits later this year. 
  
  
• This would reflect the pass-through of a weaker Nigerian naira (NGN), seasonal factors and low base effects.
  
  
• However, the CBN will likely want to support the economy and banks' creditextension amid weaker growth and aggregate demand dynamics and possiblevulnerabilities in the financial system. For example, the CBN has announced special support packages for the power and oil-marketing sectors and has encouraged loan maturity extensions to the oil and gas sectors.