By Elizabeth Adegbesan
THE FSDH Merchant Bank has projected that March 2018 inflation rate would be around 13.49 percent, a 0.84 percentage point trend down from 14.33 percent recorded in February. The bank disclosed this yesterday during a media presentation of its monthly research report titled: “Growth prospects improve but uncertainties remain” held in Lagos.
The bank’s Head of Research and Strategy, Mr. Ayodele Akinwunmi, said: “Our expectation is that it will drop further in March to 13.49 percent mainly on account of base effect of previous year. We expect inflation rate to drop to single digit in July 2018, provided there is no adjustment to the price of Premium Motor Spirit (PMS), electricity tariff, and government resolve to stop the rising crises in some parts of the country quickly.”
On the implication, he said the declining inflation rate may lead to a further drop in the yields on fixed income securities, particularly at the short-end of the yield curve.
The bank also projected that the equity market would appreciate in the second quarter of 2018 (Q2’18). This, according to Akinwunmi, would be driven by investors taking positions in the market following the sell down in March, further drop in yields on treasury bills, stability in the foreign exchange market and the release of corporate earnings and actions of companies.
Akinwunmi stated: “We expect the equity market to appreciate in Q2’18 based on historical performance. The following factors should drive the performance of the equity market: investors taking positions in the market following the sell down in March, further drop in yields on Nigerian Treasury Bills (NTBs), stability in the foreign exchange market and the release of corporate earnings and actions.”
On strategies to curb the lingering uncertainties experienced in the various sectors of the economy and to achieve inclusive economic growth in the country, Akinwunmi stated: “We have seen some micro economy improvement. We have also seen some additional inflow in Nigerian economy.