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Nairaland Forum / Nairaland / General / Business / CBN Raises Benchmark MPR By 200 Basis Points To 24.75% (10993 Views)
CBN Raises Interest Rate To 18.75% / CBN Raises Interest Rate To 14% / CBN Raises MPR To 13% From 11.5% (2) (3) (4)
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Re: CBN Raises Benchmark MPR By 200 Basis Points To 24.75% by InvertedHammer: 4:48pm On Mar 26 |
BIBILARY:/ He used the prescription for asthma in Europe to try to cure cancer in Zimbabwe. In other words, he is using the textbook implementation (increase rate to mop excess liquidity) used by Western developed economies to fix Nigeria's voodoo economy. Comparatively Japan (the 4th largest economy in the world) just increased their monetary policy rate from negative to 0 - 0.1% and that's the first rate hike in 17 years. China's prime rate remains unchanged at 3.95%. Perhaps someone can explain how a poor country trying to spur economic growth will increase her MPR to 24.75% Shylock rate. Nigerian economy is in coma and Cardoso is feeding it Sniper to quicken her death. / 1 Like 1 Share |
Re: CBN Raises Benchmark MPR By 200 Basis Points To 24.75% by Ijaya123: 4:48pm On Mar 26 |
jmoore: You’re just a confused fellow. |
Re: CBN Raises Benchmark MPR By 200 Basis Points To 24.75% by ThierryJay: 4:51pm On Mar 26 |
Saintinoo: It's a double edged sword. It also means that you stand to receive a higher interest rate gain from Banks and other financial institutions when you save or invest your money with them i.e from fixed deposits, Tbills, bonds etc. This encourages investment and savings which will help to mop up more money in circulation and reduce inflation. 1 Like 1 Share |
Re: CBN Raises Benchmark MPR By 200 Basis Points To 24.75% by teejoyz: 5:05pm On Mar 26 |
It will lead to cost push inflation due to higher cost of capital which will invariably affect cost of production which will translate to increase in prices of goods and services . At this level the government is not pursuing economic growth but just to manage inflation by mopping up money in circulation. 2 Likes 1 Share |
Re: CBN Raises Benchmark MPR By 200 Basis Points To 24.75% by NemoDatQuod(m): 5:12pm On Mar 26 |
I hope you have a genuine understanding of what happens when interest rates are raised? It increases the cost of living. The guy who has money to go speculate on forex has no problems with rates increase. In fact, it affords him more opportunities for "rent seeking" i.e making money without being productive. Treasury bills become more attractive to him and even fixed deposit schemes become more alluring to him, while at the same time he is using his funds (most likely stolen from you and I) to continue to "rent seek", on the exchange rate. But you and me, the common man, who are already out of pocket because we either do not get paid well enough at work or we just do not have jobs, we are the burden bearers. Our purchasing power shrinks further, even though it is almost dead already, to begin with. Food, fees, transport, housing etc all increases for me and you. Hence, that increase in interest rate will not serve any purpose other than making the already rich guy richer and impoverishing you and I even further. That is why our interest rate regime has never achieved its purpose. The real players causing problems are not affected. In fact, interest rate hikes reward them. That's why our rates keep going up until they get to 60% one day. When was the last time we had interest rates of 2% or 3% , something that is the fare in developed societies? For anything to work in Nigeria, we have to first kill the monster called corruption. It is the beginning and end of all of our problems. It is the architect of the tribalism that has become individualised and profitable to so many Nigerians today. Yes, in Nigeria, tribalism has become a profitable business. Crime/ banditry, etc are all originated from it. And we can solve the problem. We simply need a few good men. But they are nowhere to be found because the structure of public service in Nigeria is built on the foundation of corruption. Anyone who does not know that that country is in serious long term crisis, has not yet started. It is not about who is the president. It s about making significant, life altering surgery on the administration of government in Nigeria. Yet, the process of seeking public office is the first son of corruption. The judiciary is it's siamese twin and law enforcement is fighting with the military and other agencies on who should assume the mantle of third son. So, no Sir. There will be no mopping up of anything. The only thing being mopped up is the very little money that you and I have honestly and diligently earned and which has never been enough for anything. And it will make no impact because it is small change. The forex in the hands of our oppressors will remain in their hands and even become more attractive. It is not market forces that are leading to the gains of the Naira. It is organised speculation by the very same individuals who increased the exchange rate in the first place. In a decadent society, the worst thing you can do is to hand over control to criminals. You make everyone in that society a victim of the criminals, whereas in the past, they could only steal from a select few. Now they are manipulating everything including our currency and interest rate and are raping us before our very eyes. It is indeed a terrible time to live in Nigeria. I don't know what I would have done if I was still leaving in that country. It is easy to tell someone who does not have, to be patient or that God will see him through. But the hunger, the humiliation of not taking care of yourself enough, let alone take care of those you love, will still be there. The only question is " at what point will a majority of Nigerians rise up and say "it is better to die on my feet than to live on my knees like a dog"? Oh! and the next time any Nigerian follows after the crowd and stone or burn to death the poor guy who stole bread because he is hungry, or because his family is hungry, that Nigerian should look at himself/herself and call yourself a useless coward. This is for every Nigerian. You are angry and take the life of someone who was hungry. Yet, you "dobale" and make obeisance to and serve the very persons who have turned your daughters/sisters/wives into runs girls, the very men who have robbed you of your dignity. It is now a long midnight. A very long midnight. And only Nigerians will decide how long that midnight is going to be. Kill corruption and Nigeria will rise. Only the common man in Nigeria can kill corruption. History is replete with examples of the common man killing corruption. It happened in almost all the societies that we run away to today for safe guarding, myself included. iichidodo: 3 Likes 3 Shares |
Re: CBN Raises Benchmark MPR By 200 Basis Points To 24.75% by Saintinoo(m): 5:14pm On Mar 26 |
ThierryJay: That is the text book economics people are talking about. In US, UK and other developed countries that will work. How many Nigerians have money to save and give as loans in Nigeria? According to Wale Edun, less than 5% Nigerians have up to #500,000 in their bank account. CBN should use our own Nigeria model to solve our problems and not some western country model. The policy have not worked and will not work. |
Re: CBN Raises Benchmark MPR By 200 Basis Points To 24.75% by Freethinker87: 5:24pm On Mar 26 |
jmoore: Don't mind them. They believe they're defending Tinubu by standing logic on its head. Is Nigeria facing an excess liquidity challenge that necessitates a currency mop-up? One could argue that there's insufficient liquidity in the market. The CBN is creating an artificial scarcity to boost the value of the Naira. They don't care about the potential fallout - businesses going under or increased unemployment - as long as they secure a political victory for the Bulaba-in-chief. Nigeria is grappling with a foreign exchange shortage due to a lack of earnings from exports and the inability to meet import obligations. We have even mortgaged our oil against future earnings. This has led to the Naira's devaluation and the subsequent inflation of commodity prices. The CBN should be focused on stimulating the economy by promoting local production and entrepreneurship. 1. Institute an entrepreneur and SME grant scheme. 2. Provide low single-digit or interest-free loans to banks, while requiring them to lend these funds to entrepreneurs and SMEs with no more than a 2% spread. 3. Set conditions for businesses to have at least 5 taxpaying employees on their payroll to qualify for the grant, and an additional 10 within two years of accessing the grant. 4. Don't be lazy. Regulate the scheme diligently and watch over the banks like a hawk. 5. Most importantly, Fix power! It's 2024 fgs! Banks might not enjoy having non-profit making liquidity on their balance sheet, but that's precisely the role of a regulator to force them to love it. Within a year, you would have addressed the inflation problem and steered the economy towards productivity and prosperity. I'm not an economist, but this approach has yielded positive results in other countries. It's not rocket science. |
Re: CBN Raises Benchmark MPR By 200 Basis Points To 24.75% by Omoawoke: 5:40pm On Mar 26 |
jmoore:Bros, I’m not here to drag with you. I basically work with data daily. That’s my work |
Re: CBN Raises Benchmark MPR By 200 Basis Points To 24.75% by Freethinker87: 5:45pm On Mar 26 |
Omoawoke: You don't know cheet! You just copy and paste whatever senior agbadorians post on your agbado whatsapp group here. Tell us why there is inflation in the first place, and why the Naira fell. Also, explain to us why you think there is excess liquidity in the economy that necessitates a mop-up. |
Re: CBN Raises Benchmark MPR By 200 Basis Points To 24.75% by ThierryJay: 5:45pm On Mar 26 |
Saintinoo: Lol, it works even here. You are quite right that only few Nigerians have excess liquidity. However what you should note is that those few Nigerians (politicians, high network business owners/Ceos, multinational directors & senior management, tech investors, etc) hold a significant portion of the total liquidity in the economy. These interest rate measures will significantly impact this particular group and being a relatively financially aware segment, they tend to react rationally to the changes to maximize their value which is why Government securities are currently oversubscribed despite the apparent poverty in the land. The reaction of this group will have visible macroeconomic impact in the various markets. Remember couple of years ago when Yahoo boys were the major drivers of sharp house rent increases due to excess cash available in their hands. Now imagine if some investment scheme was available to suck cash from them, then they wouldnt spend so lavishly and of course rental rates would be lower even though Yahoo boys only constitute a small segment of the totality of Nigerians. The difference is that while most Yahoo boys rarely react rationally to stimulatory measures, investors and HNIs do. 2 Likes |
Re: CBN Raises Benchmark MPR By 200 Basis Points To 24.75% by Freethinker87: 5:49pm On Mar 26 |
InvertedHammer: I don't even blame the Cardoso - His name sounds like a flavoured alcoholic beverage. Look at the man, he studied Business Admin at University due to his fear of mathematics. The day he finished his NYSC, he was appointed as the Vice President of the defunct Citi Bank through a family connection. That was how he got into banking. I'm not making these things up, look at his resume. 1 Like |
Re: CBN Raises Benchmark MPR By 200 Basis Points To 24.75% by Remii(m): 5:55pm On Mar 26 |
jmoore:it will bring down inflation because free money should dry up and purchase of non essential items will reduce |
Re: CBN Raises Benchmark MPR By 200 Basis Points To 24.75% by Paraman: 6:00pm On Mar 26 |
kpompey:People who bought goods when the dollar was high won't want to reduce price now |
Re: CBN Raises Benchmark MPR By 200 Basis Points To 24.75% by porthouse7(f): 6:08pm On Mar 26 |
Amigoss:u won’t be hungry again |
Re: CBN Raises Benchmark MPR By 200 Basis Points To 24.75% by kpompey: 6:12pm On Mar 26 |
Paraman: But existing stocks on their shelves which were bought when dollar was very low were sold at abnormal high price when dollar was high.They made short run abnormal profit, now they need to reciprocate their action reversely.Nigerians are not dunce. They need to sell at the current market rate regardless of the cost price. 2 Likes |
Re: CBN Raises Benchmark MPR By 200 Basis Points To 24.75% by Omoawoke: 6:13pm On Mar 26 |
Freethinker87: Check my previous post back then, I was among the first to criticize the Floating of the Naira here on nairaland This is not about Supporting Tinubu or anything , this is about finance and the economy . And you sound so frustrated, are you hungry? 3 Likes 1 Share |
Re: CBN Raises Benchmark MPR By 200 Basis Points To 24.75% by kpompey: 6:13pm On Mar 26 |
Freethinker87:Honestly, you are Nigeria problems, this is business brain Ipob boys and men claimed to have. Nothing but fraud. |
Re: CBN Raises Benchmark MPR By 200 Basis Points To 24.75% by Saintinoo(m): 6:15pm On Mar 26 |
ThierryJay: Good explanation from you there, now to counter some of your points. An economy does not depend only on few players, politicians, banks executives, big businesswoman you mentioned do not bank their money in naira and most have their money stacked i n foreign accounts. It will surprise you that it is the change from common man in Nigeria that constitute loanable fund in banks. Inflation in Nigeria has little to do with how much the big boys spend. Inflation in Nigeria is more of a cost push type, prices are raising because it is more expenses to produce and imported goods are increased in price because of poor exchange rate. Now, this MPR increase will also inflation because the businesses who are willing to borrow at a higher interest rate will increase price. Godwin Emefeile increased MPR, now Cardoso two times in two months, but it has no brought down inflation, rather inflation have increased to over 32%. Now, let's analyze the inflation problem in Nigeria. The inflation in Nigeria is not as a result of too much money in circulation, you will ask, where is the money? The inflation problem is as a result of low production and scarcity. Using more of monetary policy will not treat this problem. That is what CBN do not understand. FG do not want to do the right thing to arrest inflation because it will not allow them to loot the economy the way they intend. Watch how inflation will increase for the month of March and April, then you will understand that the policy will flop, just as it flopped in the month of February. 1 Like |
Re: CBN Raises Benchmark MPR By 200 Basis Points To 24.75% by Freethinker87: 6:24pm On Mar 26 |
Omoawoke: I agree with you, this is about finance. Could you now, kindly, answer the questions. Freethinker87: |
Re: CBN Raises Benchmark MPR By 200 Basis Points To 24.75% by Omoawoke: 6:48pm On Mar 26 |
Freethinker87: There’s inflation because garri became scarce! Assuming there was enough cassava, there won’t be inflation. Does that answer your question ![]() Abeg bros, I get better project whey dey worry my head now. If you want to debate, go kings college go find one student do debate… na insult I wan dey insult for nairaland, I don’t have power for NL debate this days. Again you can check my previous posts |
Re: CBN Raises Benchmark MPR By 200 Basis Points To 24.75% by MisterBanny(m): 7:07pm On Mar 26 |
NemoDatQuod: |
Re: CBN Raises Benchmark MPR By 200 Basis Points To 24.75% by toujurs: 7:11pm On Mar 26 |
Interest rate dn increase 😆🤣🤣, i will part liquidate and reinvest, so i can benefit from this higher interest. 1 Like |
Re: CBN Raises Benchmark MPR By 200 Basis Points To 24.75% by toujurs: 7:12pm On Mar 26 |
MisterBanny:As tinubu dn fail you. ![]() |
Re: CBN Raises Benchmark MPR By 200 Basis Points To 24.75% by Konquest: 7:34pm On Mar 26 |
Re: CBN Raises Benchmark MPR By 200 Basis Points To 24.75% by MisterBanny(m): 7:39pm On Mar 26 |
toujurs: I swear. Abg help ur brother na |
Re: CBN Raises Benchmark MPR By 200 Basis Points To 24.75% by ThierryJay: 7:50pm On Mar 26 |
Saintinoo: Bro let's wait a bit and see the direction before throwing away all the prospects. Factually, there was a slight reduction in inflation when the MPR was increased to 22.75% about 2 weeks ago (as seen with commodity prices) and I guess this is what encouraged the committee to tighten the rates further. I also used to think like you wrote up there up till 2022 that all inflation in Nigeria is cost push and always wondered why there was talk of further suffocation by mopping up money from the economy. But later from certain data I came across, I discovered the CBN had a more holistic overview of the direction of money flow in the country and that there was also a parallel overly liquid portion of the economy that was impacting inflation dominated by the biggest boys. So there are two sides to the matter and it'll be interesting to see how the interplay will play out. |
Re: CBN Raises Benchmark MPR By 200 Basis Points To 24.75% by Mandesz(m): 7:51pm On Mar 26 |
adeabimbola700:interest rates gone up. U borrow u pay more. U get money in bank it yield more. |
Re: CBN Raises Benchmark MPR By 200 Basis Points To 24.75% by ogawisdom(m): 7:54pm On Mar 26 |
Freethinker87: PPL are borrowing naira to buy USD , this policy will affect those speculators & appreciate the naira. |
Re: CBN Raises Benchmark MPR By 200 Basis Points To 24.75% by Elliotwaveforec: 8:28pm On Mar 26 |
InvertedHammer:So, economic growth is the only macroeconomic challenge Nigeria has, right? What about inflation, price stability, etc.? In this present economic situation, which of the challenges needs to be prioritised? Don't you think when the exchange rate is stable, there would be confidence in the economy and price would stabilise as the number one cause of inflation in Nigeria today is weak exchange rate? I hope you know it's not only monetary policy that can be used to spur growth? Fiscal policy is available too! 1 Like |
Re: CBN Raises Benchmark MPR By 200 Basis Points To 24.75% by emmaodet: 8:40pm On Mar 26 |
Freethinker87: ![]() ![]() |
Re: CBN Raises Benchmark MPR By 200 Basis Points To 24.75% by emmaodet: 8:58pm On Mar 26 |
InvertedHammer: ![]() ![]() |
Re: CBN Raises Benchmark MPR By 200 Basis Points To 24.75% by tollyboy5(m): 9:15pm On Mar 26 |
OboOlora:Dollar rise you complain, naira rise you complain. Rubbish! 1 Like |
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