Following the recently concluded monetary policy meeting by the Central Bank Nigeria (CBN) where the majority of committee members voted to reduce the Monetary Policy Rate (MPR) by one percent, from 12.5% to 11.5%.
The key takeaways:
- This reduction means the rates on fixed income instruments such as treasury bills will possibly remain low for the rest of the year.
- Interest rates on customer savings deposits with banks is now lower at 1.15% (previously: 1.25%).
- This policy is expected to drive lower rates on bank loans to individuals and foster lending to businesses, we believe concerns on the weak state of the economy will make it difficult for the CBN to achieve its objective and banks will remain hesitant to give out loans.
Way forward for investors
Remain strategic, focused and disciplined. Your risk appetite should determine your next steps.
- High-risk appetite: Explore opportunities in traditional instruments such as equities that will pay good dividends.
- Low-risk appetite: Maintain money market or fixed income instruments to ensure your capital is preserved as well as guaranteed return on your capital.
Regardless of your risk appetite, be careful not to fall in the hands of ponzi schemes or investments that can disrupt the value of your wealth.
We are available to guide you through appropriate investment decisions suitable to your risk appetite and remain focused on navigating the market environment, with the aim to keep your investment on track towards reaching your long-term goals.
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