Dollar to Naira News

Interest rate hike may create sluggish economy, experts warn – Punch Newspaper

By Ismaeel Uthman

The Central Bank of Nigeria’s interest rate hike may create a sluggish or stagnant economy for the country, economists have warned.

The increase in interest rate and floating of naira by the CBN are moves that will crowd out investment and job opportunities, according to an economist and researcher, Mr Paul Alaje.

Also, a chartered accountant and retired director of First Bank of Nigeria, Lateef Bakare, described the apex bank’s policies as unrealistic.

Alaje, who is a Chief Economist at an economic development research firm in Lagos, SPM Professionals, warned that more people are likely to lose jobs if the CBN does not review some of its financial policies.

The analyst who spoke with Saturday PUNCH in a telephone interview on Thursday maintained that the apex bank has the responsibility to fix things and bring prosperity and balance to the nation’s economy.

He said, “The CBN’s move has been towards mitigating inflation, but the apex bank should not create more problems. The CBN is likely to create a stagnant or sluggish economy with the increasing interest rate. An economy that is not growing higher than the population growth rate is flat. We are running at that risk.

“You are crowding out investment and employment opportunities when you continue to increase interest rate while the exchange rate is also growing higher. When that happens, more people will lose jobs and there won’t be progress in the country’s economy.

“The CBN has maintained an all-time high interest rate, which compels banks to charge more on the cost of loans. Commercial banks provide loans with 30-32 interest rates while money lenders give out money between 120% and 150% rate.

“When you have these interest rates, you are crowding out investment and job opportunities. Instead of having economic growth, what you will see is people losing jobs while those who are jobless do not have opportunities because factories, industries and companies are closing down. The cost of doing business is too high.”

Three weeks ago, the CBN’s Monetary Policy Committee agreed to increase the Monetary Policy Rate for the third consecutive time from 24.75 per cent to 26.25 per cent.

Speaking after the meeting the CBN Governor, Yemi Cardoso, who chaired the MPC announced that “the apex bank resolved to raise the MPR by 150 basis points to 26.25 per cent from 24.75 per cent.”

Commenting on the MPR, Bakare said the interest rate hike would further plunge Nigeria into a messier economic situation, saying job providers and industries would find it difficult to breathe.

“The policies of the CBN are not just realistic. There must be a fundamental way than this classical economic theory approach. Once you introduce policies that will hurt the manufacturing sector, the next thing you get is loss of jobs and a fragile economy”, he stated.

See Dollar to Naira black market today, Pound to Naira, Euro to Naira, Dollar to Naira CBN rate and Dollar to Naira Bank rate today.

Related Posts

FG offers three bonds valued at N300bn for subscription – Punch News

By Agency Report The Debt Management Office is offering three Federal Government of Nigeria bonds valued at N300 billion for subscription at N1,000 per unit. According to the…

NOVA Bank plans nationwide expansion, competes for retail market – The Guardian News

By The Guardian News NOVA Bank Limited said plans are underway to expand branches across Lagos, Port Harcourt, Abuja and Kano as it seeks a reasonable slice of…

Airtel Africa, 23 Others Lift Stock Market by N262bn – This Day News

By Kayode Tokede The stock market segment of the Nigerian Exchange Limited (NGX) yesterday took a positive stance as investors buy-side actions in Airtel Africa Plc and 23…

Summer vacation, strong U.S. dollar push naira to a 4-month low – Nairametrics

By Olumide Adesina The bullish dollar index and summer vacation have led to a considerable increase in demand for foreign currencies, putting significant pressure on the naira. The naira…

Appeal Court quashes N20 million damages against Guaranty Trust Bank, backs it’s Know-Your-Customer requirements on corporate account – Nairametrics

By Nnaemeka Onyekachi Story Highlights  The Court of Appeal in Abuja has overturned a N20 million damages ruling against Guaranty Trust Bank (GTB) by the Federal Capital Territory High…

Standard Bank Securities: Banks under our coverage could pay N217bn as proposed windfall tax – The Cable News

By Bunmi Aduloju The Standard Bank Group (SBG) Securities says banks under its coverage could pay N217 billion in the proposed windfall tax. In a report on Thursday,…