Outcry As Central Bank Of Nigeria Raises Interest Rate Again

The Monetary Policy Committee of the Central Bank of Nigeria on Tuesday again raised the Monetary Policy Rate from 13 per cent to 14 per cent.

This came barely two months after the MPC, during its bi-monthly meeting in May, raised the benchmark interest rate from 11.5 per cent to 13 per cent.

The interest rate hike came barely one week after the National Bureau of Statistics put its June inflation figure for the economy at 18.6 per cent, the highest in five years.  Inflation had hit 17.71 per cent in May, 2022.

The MPC had left the MPR unchanged for over two years. However crippling inflation, worsening purchasing power and their attendant effects on the economy appear to have forced the CBN to effect policy changes.

However, experts in the financial sector have said the second hike in the lending rate at the MPC meeting reflected a panic situation on the part of the banking regulator with the signal of tougher times in the economy.

Speaking on the development, a professor of Capital Market and Chairman of the Chartered Institute of Bankers of Nigeria, Abuja Branch, Prof Uche Uwaleke, said, “The hike in the MPR in quick succession from 11.5 per cent to 13 per cent in May and now to 14 per cent could signal panic on the part of the CBN and heightens uncertainty.

“This policy stance may not necessarily curb inflationary pressure given the pressure is not coming from monetary factors but from high costs of petroleum products, electricity and insecurity, ditto for rising exchange rate.

“So, expect to see in the coming months higher cost of borrowing, widening government deficit, slower economic growth, rising unemployment and bearish stock market.”

Also speaking, the Deputy-President of the Lagos Chamber of Commerce and Industry, Dr Gabriel Idahosa, said the rate hike would amount to misery for many Nigerians wallowing in abject poverty.

According to him, the Nigerian situation, with over half the population living below the poverty line, did not justify raising interest rates in the manner it was being done in advanced economies where the income level was significantly higher than Nigeria’s.

-Punch