CBN Cuts Monetary Policy Rate to 23% to Shift Investments

The Central Bank of Nigeria (CBN) reduced the Monetary Policy Rate (MPR) by 350 basis points to 23% during its September Monetary Policy Committee (MPC) meeting, down from 26.5%. This adjustment also reset the Standing Facilities Corridor to +50/-300 basis points, with the Standing Lending Facility now at 23.5% and the Standing Deposit Facility at 20%.

The Cash Reserve Requirement for Deposit Money Banks remains at 45%. Following this decision, Treasury bill yields have already begun to decline, with the stop rate on the 364-day Treasury bill dropping from 17.59% in August to 16.62% on September 9.

Futureview Securities anticipates further downward pressure on short-term fixed-income yields, although the decline may be less than the MPR adjustment due to prior market rate decreases. Vincent Oshoma, Head of Business Development at Blue Marina Securities, stated that the speed of fixed-income yield adjustments will be crucial for determining investor movement towards equities.

The Nigerian Exchange (NGX) is currently trading at elevated levels, with the All-Share Index closing at 250,614.66 points, reflecting a year-to-date return of 61.05%.