Stocks to moderate rally as yields rise on rate hike

The outcome of Tuesday’s Monetary Policy Committee (MPC) meeting is sending conflicting signals to the financial markets on the policy direction of the monetary policy authority. While yields on fixed-income securities are expected to rise, Nigeria’s equities may moderate the recent rally, which has impressed many investors.

Nigeria’s Central Bank on Tuesday raised its benchmark interest rate, known as the Monetary Policy Rate (MPR), by 25 basis points to 18.75 per cent. The Monetary Policy Committee (MPC) left the Cash Reserve Ratio unchanged at 32.5 per cent and the liquidity ratio at 30 per cent. The asymmetric corridor was narrowed from +100/-700 basis points to +100/-300 basis points.

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