Uncertainty over CBN’s January MPC meeting

The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) responsible for monetary policy direction of the country may not hold this month, if the committee members don’t form a quorum.

Statutorily, the MPC comprises 12 members, the CBN governor (chairman), the four deputy governors, two members of the CBN board of directors, three members appointed by the president and two members appointed by the governor.

Its quorum is of six members, “two of whom shall be the governor and a deputy governor, or two deputy governors”.

The MPC meeting, usually held once in two months to set the interest rates and other key rates, starting from the month of January, all things being equal.

The monetary policy committee is the highest policy making committee of the CBN mandated to, (1) review economic and financial conditions in the economy, (2) determine appropriate stance of policy in the short to medium term, (3) review regularly, the CBN monetary policy framework and adopt changes when necessary and (4) communicate monetary/ financial policy decisions effectively to the public and ensure the credibility of the model of transmission mechanism of monetary policy.

However, if the senate fails to confirm some of the nominee sent by president Buhari, this critical meeting may not hold in January as the committee may not form a quorum required by law for the meeting to take place. This is because just five members of the committee are currently available.

Mr. Suleiman Barau the CBN deputy governor (operations), retired from active service. Another deputy governor, Adebayo Adelabu (corporate services), has also been served notice of disengagement from the CBN our correspondent gathered.

Recall too that Mrs. Sarah Alade, who was deputy governor for economic policy, had in March 2017 retired and her replacement - Aisha Ahmad - is yet to be confirmed by the Senate since her nomination in October 2017.

Also recall that in April, President Muhammadu Buhari announced the appointment of Ummu Ahmed Jalingo, Justitia Odinakachukwu Nnabuko, Mike I. Obadan, Abdu Abubakar and Adeola Adetunji as non-executive directors of the CBN board. In October, he nominated Adeola Festus Adenikinju, Aliyu Rafindadi Sanusi, Robert Chikwendu Asogwa and Asheikh A. Maidugu as new members of the MPC but they are yet to be approved by the Senate.

The Senate had refused to screen Buhari’s nominees in line with its July 4 resolution to suspend all executive confirmation requests until Ibrahim Magu is removed as the acting chairman of the Economic and Financial Crimes Commission (EFCC).

“The information I have is all the MPC members including other nominees are yet to be approved by the Senate due in part to the current impasse over Magu’s clearance. Two DGs have retired, one was nominated but yet to be cleared by Senate. That means there will be no quorum for any MPC meeting in January unless they are cleared before the meeting,” Mr. Rislanudeen Muhammad, an economist told our correspondent.

Thus, should the Senate not budge; the Nigerian economy will still function based on the MPC key rates released in November 2017 irrespective of whether they reflect the current economic realities or not.

Dr. Bongo Adi, an economist and lecturer at the Lagos Business School, he doesn’t think the MPC not meeting would change anything. In the past year, the MPC has kept all key rates on hold and there is no indication they would shift positions just yet he said.

According to him, this is so because, the underlining conditions for those decisions haven’t change. Thus, if they (MPC) don’t meet, things will still remain the same and if they meet nothing might change still.

On whether the MPC’s inability to meet might affect investors’ confidence, he said that might not happen. As far as the oil price is still climbing and the exchange rate has largely remained stable, we won’t expect untoward behavior from investors he noted adding that “I don’t see any investors changing his perception of Nigeria so things will remain pretty much the same,” he said.