FBNQuest: Sustained Tight Monetary Policy Will Heighten Market Yields

Nume Ekeghe

Analysts at FBNQuest, the asset management subsidiary of FBN Holdings Plc, have stated predicted robust market yields throughout the year on the back of sustained tight monetary policy by the Central Bank of Nigeria’s (CBN).

In its Economic Outlook Report, FBNQuest said despite prevalent economic challenges, it is optimistic rabout the financial landscape, emphasising the potential for sustained high yields amidst prevailing market conditions.

“Market yields are expected to remain high this year, despite the current economic challenges. This is due to factors such as the tight monetary policy that the CBN is expected to sustain, as well as a sizable supply of Federal Government of Nigeria paper, which will be driven by domestic borrowings of around N6.1trillion, “they said.

Head of Equity Research at FBNQuest, Tunde Abidoye, stated: “Despite the myriad headwinds confronting the economy, such as low-single-digit GDP growth, high inflation rates, and downward pressure on the naira exchange rates, the Government’s steadfast commitment to policy reforms holds the potential to yield favorable economic outcomes.”

He said the proposed tax reforms’ implementation is poised to incrementally elevate non-oil revenue from its current sub-5 per cent of GDP to the high single digits. Ultimately, this trajectory aligns with the Federal Government’s medium-term objective of reaching 8 per cent non-oil revenue as a proportion of GDP.

“We need strong policy interventions and concerted efforts to strengthen tax compliance and encourage investments, especially at the base level, for increased business productivity and sustainability, “he added.