Detrimental consequences of CBN raising interest rate to 27.25%, by Abubakar M. Kareto
The Central Bank of Nigeria’s decision to raise the interest rate to 27.25% will have far-reaching and detrimental consequences for the nation’s economy, which is already facing significant challenges.
This move will discourage businesses from accessing credit to expand production and create jobs, thereby perpetuating economic stagnation.
READ ALSO: Nigeria’s interest rate jumps to 27.25% as CBN raises MPR
Furthermore, the interest rate hike’s effectiveness in addressing inflation will be compromised by the continued decline in the naira’s value, resulting in higher prices for imported goods.
The CBN must acknowledge the shortcomings of this policy, particularly in light of banks’ low interest rates for savers and the limited attractiveness of 15% government bonds to investors amid rising borrowing costs and currency depreciation.
To prevent a descent into stagflation and depression, bold and innovative policy initiatives are urgently required.
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