Anxiety over MPC first meeting of the year

Ordinarily, the Central Bank of.Nigeria (CBN) MPC should be holding its first meeting in the year on January 22-23, if it's past activity is anything to go by, however, the regulatory bank is yet to release its meeting calendar for the year, casting doubt over the possibility of meeting anytime soon.
The reason behind this may not be farfetched; membership of the MPC has depleted below the tolerable level of six members recommended as a quorum for a meeting to be legitimate.
The committee which was established under the CBN Act of 2007, was to enable the monetary authority to facilitate the attainment of one of its key objectives of price stability and support the economic policy of the government through experts discussion and decision making and input.
The committee has met regularly every other month and for six times in the year since it was inaugurated under the enabling law. The committee has also taken decision mainly on interest rate and at some point foreign exchange regulation. Since 2016 till date, the committee has chosen to hold the Monetary Policy Rate (MPR), which represents the benchmark interest rate in the economy at 14 percent in a bid to tighten liquidity and ensure price stability by curbing speculation on the local currency.
The committee has equally intervened in the foreign exchange regulation at a critical stage when the naira was facing attack from speculation as a result of dollar shortage, bringing sanity to the market.
However, the membership of the committee has been depleted with the retirement of two deputy governors of the CBN since its last meeting in November and the resignation of some independent members that are yet to be replaced by the government.
Although President Buhari has submitted the list of nominees to replace the retired deputy governors and some of the board members of the regulatory bank, the National Assembly is yet to work on the nomination, putting the activity of the committee in abeyance.
Many analysts have suggested a more dovish move by the MPC this year in term of its stronghold on liquidity tightening to create room for easing and ensure that funds are made available to other economic agents in the economy at a cheaper rate.
Some of the analysts believed that a more tolerable interest rate could serve as a catalyst for economic growth and increase the country's possible growth with its consequent impact on the standard of living of the generality of the people.
The question on the lips of many observers of the monetary policy is, should the committee unable to meet early this year to take a decision on the way forward, what would be the implications on the economy and monetary policy in particular?
Uncertainty could rule the entire money market atmosphere, while a cloud of disappointment could envelop the investing public, especially offshore investors who are looking forward to a pronouncement from the CBN on the future of interest rate in the market.
Although yields on local fixed income have come down toward the end of last year due to the proposal by the government to reduce its domestic borrowing and replace it with external debt, the fact remains that cost of lending to businesses by banks remain high, depriving some small businesses access to cheap funding.
Also, the direction of interest rate could help foreign portfolio investors (FPI), who have dominated the nation's equity and fixed income market, determine the location of their investment. Many of the FPI had reduced their position in the debt market as soon as they saw the sign of declining yield last year after the debt management office (DMO) redeemed over 450 billion naira in mature treasury bills. Many of the FPI and direct foreign investor usually consider high-interest rate environment and stable exchange as attractive to their investment choice. Uncertainty inter policy environment could jolt them and undermine their confidence in the economy.
Unless the National Assembly is able to confirm the federal government nominees on both the board of the CBN and the appointment of deputy governors, then MPC maybe hampered from performing its critical role in the economy.
The central bank could, however, resort to administrative measures to mitigate the effect of the inability of the MPC to meet at the end of the day to ease the pressure on its monetary policy.
But definitely, uncertainty will continue to rule the monetary side of the economy, especially at a time the National Assembly has suspended work on the approval of the 2018 national budget.