Stats: 3,191,068 members, 7,942,879 topics. Date: Saturday, 07 September 2024 at 07:01 PM |
Nairaland Forum / Nairaland / General / Business / CBN Raises Benchmark MPR By 200 Basis Points To 24.75% (10991 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)
(1) (2) (3) (4) (5) (Reply) (Go Down)
Re: CBN Raises Benchmark MPR By 200 Basis Points To 24.75% by emmaodet: 9:15pm On Mar 26 |
Freethinker87: ![]() ![]() Omoh....people get mouth for this forum ooo. His name sounds like a flavoured alcoholic beverage...chaii |
Re: CBN Raises Benchmark MPR By 200 Basis Points To 24.75% by ottersberger(m): 9:34pm On Mar 26 |
OboOlora: Exactly. Voodoo economics. |
Re: CBN Raises Benchmark MPR By 200 Basis Points To 24.75% by InvertedHammer: 11:01pm On Mar 26 |
Elliotwaveforec:/ While we shout "inflation", it will be proactive to understand the causes of inflation in Nigeria --insecurity begets food inflation as kidnappers prevent farmers from unhindered access to their farms. Let's not delve into abrupt removal of oil subsidy without planning ahead for palliatives. Floating of naira when the country is heavily import-dependent with no production/manufacturing base and the only major source of forex known as oil is marred by corruption and theft. Even in the forex transactions, corruption via arbitrage and prebendalism are the orders of the day. What's the nation's foreign reserve? As noted earlier, what Cardoso and team are doing is akin to signing up Nasarawa United FC to play in the English Premier League. A child must learn to walk first before attempting to run. The current problem in Nigeria is not inflation but stagflation--inflation in a stagnant economy. / 1 Like |
Re: CBN Raises Benchmark MPR By 200 Basis Points To 24.75% by KORLAR(m): 11:22pm On Mar 26 |
jmoore: Nope. There’s excess money supply in the economy which is part of what’s causing inflationary pressures. The increase is to mop up money supply. 1 Like |
Re: CBN Raises Benchmark MPR By 200 Basis Points To 24.75% by KORLAR(m): 11:23pm On Mar 26 |
OboOlora: We’re in an era of confident, ignorant people. What do you owe me if this your prediction fails? Put your money where your mouth is. 1 Like |
Re: CBN Raises Benchmark MPR By 200 Basis Points To 24.75% by Emmastan291: 12:15am On Mar 27 |
Freethinker87: Thank you Chief |
Re: CBN Raises Benchmark MPR By 200 Basis Points To 24.75% by grandstar(m): 1:30am On Mar 27 |
Freethinker87: A lot of what you said about the danger of monetary policy is actually true. And that is why many countries have independent central banks whose primary goal is to maintain price stability which basically means low inflation. The central bank will go out of its way to achieve that, even if means hiking interest rates till it drives the economy into a recession. It does not care. Politicians nor interest groups can't dictate to it. Only when inflation is contained will it begin to lower interest rates. The major economies of the world are currently in a recession or near one because central banks in these countries are trying to rein in inflation using a tight monetary policy. Inflation.ran amok during the early 2020s as economies tried to reflate their economies due to the Pandemic which ground all economic activities Inflation was basically dead. They used loose monetary policies such as printing money and low interest rates and loose fiscal policies such huge government spending in the form of overgenerous Covid checks to individuals. However, they went too far and inflation had the highest spike they've ever seen in decades. Normally, their inflation target is around that 2% figure. It hit close to 10% The central banks began increasing interest rates to bring inflation but have not been tight enough as this was a once off case. Nevertheless, economies of these big rconomies are in a recession. The central bank does not care about how I, you or the president feels. It must bring inflation down. I am just telling you the blunt truth. The only reason why Cardoso may have encountered problems raising interest rates higher much sooner may be due to a love by the Presidents for low interest rates like you. Tinubu has no right to dictate to the CBN but Cardoso is powerless as he his Tinubu's boy. I suspect that is why Cardoso hasn't been aggressive enough in regards tackling inflation. I do believe a messed up float and exchange market might have contributed to inflation but he should nevertheless have moved aggressively against high inflation. Calls for inflation to be fought actually began after the "petrol subsidy removal", which led to a spike in prices. It began well before the Naira Float. When he increased the MPR from 18.75 to 22.75, the exchange rate went overnight from. $1-1,900 to 1,650 or so. Cardoso had the means to contain things. If the market trusts he will fight inflation when he has to, this will put faith in the economy and the Naira. He hasn't shown that mettle. That inflation is falling isn't enough I know this wasn't what you wanted to hear but this is the blunt truth. What I or you think or even the president's is not the central banks cup of tea. The central bank should keep far from developmental finance. That was Emefieles speciality. Thank God he is gone. Such grants are eventually largely stolen with most of it never repaid. The best policy is affordable credit from commercial banks. This can be achieved by bringing inflation down, and then bringing interest rates down with it. There's also the fiscal aspect. Federal government budget must either balance or be low. The higher your budget deficit, the higher your inflation rate is bound to be. In addition, Henry Boyo, a late Nigerian economist noticed that any time the monthly allocation is shared to the 3 tiers of government, he noticed there's a spike in inflation, due to an increase in the money supply. The CBN now uses costly bonds to mop up the excess money which ultimately leads to costly commercial bank loans. He suggested if the dollar component of those allocations could be paid in dollars instead using dollar certificates, this will help curb the excess money. He said paying the dollar component in Naira is very inflationary. He said pay the dollar component in dollar certificates. This will instantly stop the Naira spike. Next when the 3 tiers of government want to redeem their dollar certificates at commercial banks, it would be as though dollars were chasing the Naira which would lead to a massive appreciation of a Naira. A mixture of no excess money in circulation and a strong Naira would lead to a sharp drop in inflation The CBN can start rapidly reducing interest rates until it hits single digits. Charles Soludo actually tried to implement this but was frustrated by people within the CBN and the governors who felt a great unease with the dollar certificate papers (they probably would have preferred real dollar notes). |
Re: CBN Raises Benchmark MPR By 200 Basis Points To 24.75% by Freethinker87: 3:41am On Mar 27 |
ogawisdom: Absolutely not! Speculators will speculate whether the Naira rise or fall. Have you seen a trading screen? There's a stop-loss-order and a short feature. The only people that'll suffer from this reckless monetary policy are small businesses and consumers. |
Re: CBN Raises Benchmark MPR By 200 Basis Points To 24.75% by Ikaeniyan0: 7:50am On Mar 27 |
jmoore:Business A wont have to borrow because of the high interest rate. |
Re: CBN Raises Benchmark MPR By 200 Basis Points To 24.75% by aderinsola75355: 8:27am On Mar 27 |
NiceNice... |
Re: CBN Raises Benchmark MPR By 200 Basis Points To 24.75% by Elliotwaveforec: 8:28am On Mar 27 |
InvertedHammer:I asked you a simple question, if you were the CBN governor, would you prioritise growth over price stability? Monetary police to tackle inflation; and fiscal policy to tackle economic stagnation! And that's what the CBN is doing and they are on the right path. Ensure price stability first and then start measures to spur growth. 1 Like |
Re: CBN Raises Benchmark MPR By 200 Basis Points To 24.75% by MrPristine: 10:01am On Mar 27 |
SmartyPants: You are obviously the one that is clueless about how the economy works. The question you should ask is what is causing the excess liquidity in the system and this is due to government's fiscal irresponsibility and huge deficits as a result of budget padding. To stabilize the Naira, what needs to be done is to cut down drastically on government expenditure while the productive sector of the economy is well funded to stimulate growth in the economy. Increased production will also bring down the rate of inflation. This is the right thing to do instead of the daft and senseless increase in interest rates to further stifle productivity. |
Re: CBN Raises Benchmark MPR By 200 Basis Points To 24.75% by SmartyPants(m): 10:57am On Mar 27 |
MrPristine: Lol. This is elementary economics and I don't know why you are arguing. In fact, it is obvious common sense. When production increases, businesses earn more money which flows into income for the owner and for labour, which in turn flows into households who then have more spending power, which creates more demand and obviously then leads to inflation. Usually, this is good inflation as long as it is managed well. Unfortunately, inflation is already way too far out of control to accommodate any further increases. It doesn't particularly matter how the inflation came about. The fact is, once there is inflation, you cannot increase the money supply in the economy. You should rather take steps to contract the money supply by reducing the velocity and quantity of money in the economy. Other steps as you've mentioned should also be taken to curtail future inflation - but to deal with the present one you must stifle the flow of money into the economy. 1 Like |
Re: CBN Raises Benchmark MPR By 200 Basis Points To 24.75% by MrPristine: 11:33am On Mar 27 |
SmartyPants: You obviously can't distinguish between demand pull inflation and cost push inflation and the different strategies for tackling them. What we have in Nigeria is cost push inflation but government is using interest rates increase which is a strategy for tackling demand pull inflation to tackle it and in the process creating more problems while inflation remains high. That said, I am not suggesting that money supply be increased. Rather I am suggesting that the existing money in the system be channeled into more productive ventures and this can be achieved if government reduces their deficit spending and instead allow the banks to use the same money being used to fund the deficit (excesses and looting) to fund productive activities in the economy. |
Re: CBN Raises Benchmark MPR By 200 Basis Points To 24.75% by SmartyPants(m): 11:57am On Mar 27 |
MrPristine: Lol... I think you would be best served by listening here because your responses are all over the place. 1. I have just demonstrated to you that increasing productivity can trigger demand-pull inflation while making the point that we can't afford extra inflation (regardless of whether the current inflation is cost-driven). I further concluded by agreeing that the steps you recommended can come in the future. That is to say: bring cost-push inflation to a halt first, then increase production afterwards, so that demand-pull inflation does not add to the existing cosh push inflation. Is that a complex argument? 2. The MPR was only just increased (nearly doubled) just a month ago. This obviously begs the question, why didn't the previously lower rates stimulate increased business investment and productivity to slow down inflation? The answer is that, excess liquidity has been going into the purchase of US dollars as a high-growth asset, thus driving the cost-push inflation you spoke of, given Nigeria's import dependence. So if you like, reduce the MPR to 1% - it won't increase business spending as long as the dollar remains overvalued to the naira. This leads to point 3. 3. As I earlier mentioned in my first reply, increasing the MPR is also about attracting foreign portfolio investment which is critical for driving down the cost of the USD dollar, which is the major driver of cost push inflation at the moment. Drive down the cost of the dollar and bring the naira to its true value and we can cycle back to point one: tackle cost factors first then stimulate the economy second. 1 Like |
Re: CBN Raises Benchmark MPR By 200 Basis Points To 24.75% by Elliotwaveforec: 12:06pm On Mar 27 |
SmartyPants:Brilliant! 1 Like |
Re: CBN Raises Benchmark MPR By 200 Basis Points To 24.75% by InvertedHammer: 4:42am On Mar 28 |
Elliotwaveforec:/ 1. Reduce interest rates to bare minimum to spur growth. SMEs are the engine of third world economy. 2. CBN printed trillions of naira since 2020 that is not circulating in the country. The funds were given to their cronies that converted such to foreign currencies domiciled in foreign banks. They printed so much money yet there is no money in circulation that banks had to resort to rationing available funds. Go figure! Nigeria is not working because people choose to embrace the rhetorics of the people at the helm of affairs as the ultimate truth. Yet there has been no light at the end of the tunnel in 10 years. Monetary policy. Fiscal policy. You are still reading too many textbooks. Policies must be tailored to local contents. IMF and World bank prescriptions rarely help any country. It is like taking financial advice from purveyors of loan apps. / |
Re: CBN Raises Benchmark MPR By 200 Basis Points To 24.75% by jmoore(m): 6:42pm On Mar 28 |
KORLAR:Ever heard of cost push inflation? You guys don't know that price of petrol that went from 165 to 650 naira and high cost of diesel is the major factor of the inflation. |
Re: CBN Raises Benchmark MPR By 200 Basis Points To 24.75% by KORLAR(m): 10:51pm On Mar 28 |
jmoore: There’s that and there’s excess money supply. Watch and see, prices for some commodities have started reducing; more will follow. |
Re: CBN Raises Benchmark MPR By 200 Basis Points To 24.75% by sameoldguy: 4:10pm On Apr 03 |
ppogba:. Greed is what is messing up everything in Nigeria |
Re: CBN Raises Benchmark MPR By 200 Basis Points To 24.75% by sameoldguy: 4:11pm On Apr 03 |
CodeTemplar: How many sellers bought good when $$$$ was high? People always use that as excuse to rip people off. |
6 Ways To Derive More Value From Your Money / Ubah: I Will Contest Anambra Governorship Election / Complaint About Akin Alabi
Viewing this topic: 1 guest(s)
(Go Up)
Sections: politics (1) business autos (1) jobs (1) career education (1) romance computers phones travel sports fashion health religion celebs tv-movies music-radio literature webmasters programming techmarket Links: (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Nairaland - Copyright © 2005 - 2024 Oluwaseun Osewa. All rights reserved. See How To Advertise. 80 |