HOW MONETARY POLICY AFFECTS YOU AND I

HOW MONETARY POLICY AFFECTS YOU AND I 

You know CBN’s new policy of excluding domestic investors from its Open Market Operations (OMO) and rather allowing only foreign portfolio investors has forced domestic investors to purchase government securities such as bonds and T- bills. With the rush it has killed the coupon rates of bonds and discount rate on T- bills. Rates are not favorable. Commercial Banks have lobbied CBN to exclude private entities from purchasing Govt securities and as such private entities rushed fixed deposits and now the rates have crashed affecting institutions and individuals such as you and I. The CBN wants Banks to fund Agriculture and Infrastructure on a long term basis . 

So that’s why your Fixed Deposit yields a very low interest . 

In a time like this you may wish to diversity your portfolio a little as an institution or an individual. The reason is because for most of us who are employees of small businesses or blue chip companies ,starting an active business in this period comes with a lot of uncertainty. Money in the Bank is loosing value as inflation sets in badly. Futures exchange rate is now N501 to the Dollar .