By Peter Egwuatu
As the much-delayed meeting of the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) gets underway today, stockbrokers have assessed the negative impacts of the delay on the activities in the Nigerian capital market.
The MPC meeting has been delayed for three months due to inability to have a quorum as Federal Government did not tidy up nomination to the committee to replace retired members.
The President, Chartered Institute of Stockbrokers (CIS), Mr. Oluwaseyi Abe, commenting on the situation said the delay prevented announcement of policy direction on some critical monetary tools which would have enhanced investment decision in both the money and capital markets.
He stated: “The MPC is supposed to drive activities both in the money and capital markets as the two markets are inversely related. The inability of the MPC to meet since the beginning of the year has a major drawback on our market.
“ What it means is that there are no policies that the market can react to. Policy announcements by the MPC drives the economy. There are certain things that have been happening that we know, even if they are not yet announced officially. For instance, we know that the Federal Government is refinancing its local debt, the Treasury bills. It is also floating foreign bonds, Euro Bonds whose costs are cheaper compared with domestic debt.”
Corroborating him, the Managing Director and Chief Executive Officer, Network Capital Limited, Mr Oluropo Dada explained that lack of policy direction can bring about distortions and uncertainties .
He stated: “ The monetary policy guidelines are tools for managing the economy and non meeting of the committee is a pointer that all is not well with the economy.
“ Stockbrokers and other investment analysts are interested in what happens to the interest rate now that inflation rate is declining. It is likely that MPR will go down by some basis points when the MPC eventually meets. But uncertainties, ambiguities and distortions will persist.”, Dada said.