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Mainstreet Bank MD Predicts Stable Money Market Rates

27 Jan 2013

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Mainstreet Bank MD, Faith Tuedor-Matthews

By Festus Akanbi

A combination of the current liquidity in the system and the decision of the Central Bank of Nigeria’s Monetary Policy Committee to retain the Monetary Policy Rate at 12 percent at its last week’s meeting is bound to usher in a regime of stable money market rates, Group Managing Director, Mainstreet Bank, Faith Tuedor-Matthews has said.


Responding to THISDAY enquiries on the implications of the decision of the apex bank to maintain a tight grip on the rates, Tuedor-Matthews said on Friday “Money market rates are expected to remain stable (up until the next MPC meeting of March 18thand 19th when  MPR might likely be reduced) and will continue to reflect system liquidity and trend between a band of +/-250bps around the MPR.”

Similarly, the MBL chief said market rates for 90-365 day deposits are expected to fall in anticipation of March 2013 MPC decisions; a flattening of the yield curve.

She also expected an increase in secondary market activities in the bond market as we approach March 2013 when Barclays will include Nigerian bonds in its Emerging Market Bond Index; with southwards movement in bond yields and northward price movements.

According to her, “Most analysts expect relative stability in the FX markets (WDAS, autonomous, BDCs and parallel) as accretion to Nigeria’s external reserves remains stable at the back of further foreign exchange inflows to buy Nigeria’s fixed income securities and shares.”

Tuedor-Matthews also said a further decline in inflation rate is being envisaged with some analysts predicting a single digit inflation figure by end of Q1, 2013.

Saying banks have every cause to take higher risk by giving audience to the private sector, the MBL chief said, “Ultimately, risk averse banks that invested a large chunk of their liquidity in relatively high yielding, but safe, fixed income securities in 2012 would have to have a rethink in 2013 as the emerging low interest rate scenario would pressurise them to take higher risk by advancing credits to the real sector of the Nigerian economy to sustain, and perhaps improve, on their profitability level.

Tags: Business, Nigeria, Featured, MAINSTREET BANK

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