By Peter Egwuatu

Standard Chartered Bank Nigeria (SCBN) has projected that the Central Bank of Nigeria, CBN will further raise its benchmark interest rate, the Monetary Policy Rate, MPR by 300 basis points.

The bank’s projection is coming ahead of first meeting of the CBN’s Monetary Policy Committee, MPC this year.

Making this projection while speaking at the bank’s Global Market Outlook 2024 with the theme “Sailing with the wind”, Ayodeji Adelagun, Head, Financial Markets, Standard Chartered Bank Nigeria (SCBN) Ltd, said: “I foresee the CBN increasing the MPR by 300 bases points by the time it holds the MPC meeting in February this year because of the high rate of inflation. Though, major analysts project 500 bases points increase, but I think it will be around 300 bases points as I don’t see the MPR falling if inflation keeps increasing.”

He noted that last year Nigeria witnessed a dynamic market reforms, policies and initiatives planned to fast track and boost economic recovery. “These policies were aimed to promote growth; however, it is going to be tough in returning to the normal” he added.  

Commenting on foreign exchange stability, he said that: “Foreign investors are likely come in with Eurobond to boost the market. Foreign portfolio investors’ challenge is the problem of coming in and exiting. The CBN had expressed commitment to ensuring stability in general price level and exchange rate.”

In his own speech on Global Outlook 2024, Manpreet Gill, Standard Chartered Bank’s Chief Investment Officer for the Africa, Middle – East and Europe (AMEE) region said: “The first month of a new calendar year is often a time when many of us plan our investments for the coming year. One topic that always enters the conversation today is what to do with cash deposits. In our Outlook 2024 report, we laid out a clear preference for equities and bonds over cash. However, with cash yields still in the region of 5%, is the potential additional return worth the risk?

“We strongly believe it is, and particularly so today given our outlook for interest rates. The cash threshold is less difficult to beat today. We believe a cash return threshold of around 5% is less difficult to beat today. Most bond yields or income-generating assets already offer yields that are higher than what is available on cash. Over longer time horizons, this yield forms a rising share of total returns, making this factor increasingly compelling as the horizon extends.”