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Breakfast Report - 28 March 2022

The Week Ahead
In its second meeting of the year, the Monetary Policy Committee (MPC) voted to keep all parameters constant. Unlike Ghana and Egypt which raised their policy rate to combat inflation and defuse currency pressures, six members of the ten-man committee upheld the status quo. The apex bank restated its pro-growth view, as it expects the Nigerian economy to expand by 3.24% y/y in 2022 (Vetiva: 2.8% y/y). The Committee also expects its development finance activities to subdue inflation over time. However, the big question remains, can the CBN remain neutral during a time of monetary policy normalization? In light of the monetary policy trilemma, a weaker exchange rate or a higher interest rate may be required to boost capital inflows, especially at a time of increased geopolitical tensions.
Equity: We anticipate further mixed sentiment to start off the new week, amid the gradual fizzling out of the effect of corporate actions that have dominated market activities.
Fixed Income: Following the aggressive sell-side action that dominated the bonds space last week, we expect this week to start on a more positive note, amid pockets of buy-side action across the bonds space. In the NTB and OMO markets, we expect liquidity and the latest PMA results to continue to dictate market activity.