TheBillyonaire:
Increasing interest rates and tax rates due to inflation is basic, but at the moment, the inflation is not caused by excessive liquidity in the system so mopping up liquidity is not a good idea.

More people are not able to fill their car tanks, generators and those are indicators of rising cost of energy, that does not look like a country with supplusity of cash as a driving force on cost of living.

What Nigeria needs is developing and sustaining manufacturing and exporter capacities, massive construction drives and developing our tourism to keep currency flowing through people's hands.

So, BoA is called Bank of America and should focus on America.

You forgot the most important - SECURITY for the food producing areas.

iammo:




Americans should focus on thier own banking crisis

High intrest rate, which will make entrepreneur drive prices of goods up

Silicon valley bank, Signature bank , just collapsed with people's deposit they are giving us useless advise

Imagine, I sell bags of rice, and my capital is borrowed from a bank at 28% intrest rate for 1,000,000 now if Banks listens to US and up it to 35% is it not my customers that I will spread the intrest on


.

I don't even understand their new found love in our financial sector anymore.

How does this drive inflation down? So, those market people understand this English?

iammo:




Americans should focus on thier own banking crisis

High intrest rate, which will make entrepreneur drive prices of goods up

Silicon valley bank, Signature bank , just collapsed with people's deposit they are giving us useless advise

Imagine, I sell bags of rice, and my capital is borrowed from a bank at 28% intrest rate for 1,000,000 now if Banks listens to US and up it to 35% is it not my customers that I will spread the intrest on


.

Is there anything wrong if a mathematician from America tells his Nigerian counterpart that 1+1 is 2? These guys believe the same thing. The same laws of physics they teach you in Oxford is the same they'll teach you in Unilag. There's no difference. If there any difference, it may just be that the students in Oxford have the proper tools to achieve astounding results

Now, why does the BoA advise the CBN to raise interest rates?

In most developed countries, their central banks are given the prime jobs of keeping inflation at 2% or less. But you may ask-what does the central bank do when inflation goes higher than 2%?

The central banks prime tool of choice are interest rates. But why interest rates?

The central bank starts by increasing interest rates. When interest rates rise, it makes people and companies save more and spend less. By saving money, this reduces the money in circulation. The less money in circulation, the lower the inflation rate. The central bank keeps increasing interest rates until it brings the inflation rate below 2%

When the central bank is satisfied that inflation rate is below 2% and that inflation has been subdued, it will start lowering interest rates again.

Can higher rates by central banks not adversely affect the economy? Definitely, it can and it does. It discourages companies from borrowing and investing, there are default on loans by consumers and companies because they cant afford higher interest rates, making some declace bankruptcy and shutdown. Many atimes, it tilts economies into a recession.

So, why are nations determined to keep inflation low:

1. Inflation adversely affects the poorest people. They usually spend all their money on consumables and on survival.

The middle class and especially the rich can hedge against inflation by buying assets but not the poor. The rich can buy land, stocks and shares, gold or keep it in a currency that takes serious that 2% inflation target like Swiss francs.

But then, the middle does feel the sting of inflation when you hear them grumble.

2. High inflation affects planning

Imagine you need 5m to start a business and when you go to purchase your items 2 months later, you discover it's now 6m. You need to find am extra 1m. That's why some people immediately change all their Naira into fx. They don't want to take that risk.

3. High inflation and currency depreciation can nor be divorced. Inflation is devaluation in another form or name.

If your inflation rate is 10% per year , that means your currency will buy 10% less by the end of the year.

If you inflation rate is 2%, that means it buys 2% less in a year.

So, imagine if $1- 100 Swiss Franc and $-N100

Swiss inflation rate is 2% while Nigeria is 10%

Let say is exporting a bag of beans to America for 100 Swiss francs and N100

1year. - 100 Swiss francs. N100
2nd year. 102 Swiss francs. N110
3rd yr. 104 Swiss francs. N120
4th ye. 106 Swiss francs. N130
5th year. 108. Swiss francs. N140

Assuming the dollar is still $1-100 Swiss francs and $1-N100.

That means in the fifth year, America is paying the equivalent of $1.08 for the swiss bag while the Nigerian bag is selling for $1.44. The only way the Nigerian supplier can remain in business is if the Naira devalues.

Most often, such currencies are allowed to depreciate yearly rather than wait for 5 years in other to stay competitive.

The BoA also states that high inflation will discourage foreign investors. The country desperately needs them.Nigerians don't save much and so can't invest much

Foreign investment can help Kickstart the economy. Charles Soludo said that if a country receives foreign investment equivalent to 5% of GDP annually for 5 years consecutively, the economy will be growing so fast that it would crash.

Higher interests rates will lead to the Naira appreciating. If interest rates rise to 25.5%, the Naira should appreciate to around 680.

mapist:


You forgot the most important - SECURITY for the food producing areas.

How is that relate to the Op'ed message?

BigDawsNet:
Bank of America is right

How? BOA is wrong on this one. The single most important that has a correlation effect on Nigeria's economy is the Forex exchange. 80% of Nigeria's consumable goods are imported.

Flets:
Even when everyone knows it’s against the interest of Nigeria, Tinubu will do it….. and this is why

The West has got the President they need to do all their bidding. They've got Tinubu by the balls .... they have all his dossier ranging from the drug activities to fake identitiy, fake education, rigged election etc. The West got their best puppet.

TINUBU HAS NO OPTION THAN DO THE BIDDING OF THE WEST. Otherwise, he loses it all.

All policies implemented by Tinubu are per IMF and world bank recommendations and aimed at further impoverishing the Nigerian people further like they do to all third world countries.

Only Nigerians can save themselves by taking their country back

If the Nigerian court is unable to nail him on any of those charges, the west no fit do anything. nothing like holding the oga for blockos.

TheBillyonaire:
How is that relate to the Op'ed message?

Lol. This is how it relates....

When there is persistent inflation, if rates and in some cases taxes are jacked up but there is no instant deceleration of inflation, you are to look at legacy issues/challenges such as insecurity in food producing areas, poor infrastructural and storage facilities to support agricultural value chain etc and these are synonymous with the Nigerian situation and is being reflected in our "headline inflation".

oluwaseyi0:
this people should focus on there country, we don;t tell them how to run theirs

we just remove subsidy on both fuel and dollar, we can't increase interest rate for now

High inflation hurts, especially the poor. The middle class and especially the rich can hedge against inflation by buying dollars, buying land or shares etc.

The poor use all their money to survive.

High inflation is also bad for investment or long term financial costing.

Take for instance you're costructing a road. Due to high inflation, you keep having to increase construction costs.

When interests rate increase, it encourages people and companies to save their money in banks. This reduces the money in circulation. The central bank will keep increasing interest rates until it brings inflation down and subdues it. After it has subdued it, interest rates will begin to come down..

A good part of hike in interest rates is that it will lead to the appreciation of the Naira. At 25.5%, I won't be surprised if the Naira appreciates to 680 to the dollar. This will make things cheaper.

otunbakolawole:
My father came back from England in 1975 after studying there for almost 10 years. He was happy to come back and rushed back home. People of his age then all rushed back because the naira was two to $1. You could buy a new car for an amount you can’t even buy a tyre for today. So, you can see the importance of money. The brain drain was to our side (towards Nigeria). But the moment the money started getting useless — in other words, you have to work 10 times more to get the same thing, because of the fact that your money has been eroded and people say, "am working so hard, and I am only earning peanuts" — the brain drain started.

The point I am trying to make is, the first lesson of governance is the fear of inflation. And what is inflation? Inflation means that you are not managing your money supply very well. An Inflation rate as high as 25 per cent means that in four years, the money they are paying you at that time will not buy you a single loaf of bread because inflation has been taking out 25 per cent each year. An example is pensioners who may be earning static salaries. So, if you’re not getting 25 per cent increase in salaries annually, it means that in four years’ time, the money is nothing.

We need to tackle the inflation menace head on. We can't shy away from it. All these trial and error economics won't save us if we don't fasten our belts and get serious.

A voice of reason! The economic illiteracy on Nairaland is worrying.

Because of high inflation, many quickly change any Naira they have into Dollars because they don't trust the currency.

When I think of all those who stored billions of Naira at home since 2015 or even since 2019, I just wince. That money has lost at least half it's value in just 4 years.

Worse, it is the poor that suffer most from high inflation

I am still standing on that quote, because the government can/ will not favour those refuse to change their bad ways in sabotaging the economy of the country. Amen

cucumbar:
was that not your slogan barely a month back? Why is it paining you that others are adopting it?
Always talking of making sacrifices…remember you said the same thing 8 years ago.here we are still making sacrifices.
you guys are really the dumb ones supporting failures back to back.

IT WILL FAVOR HIM AND HIS FAMILY.. you can go ahead and continue making sacrifices.
ZOMBIE!

9jaRealist:


Speaking of ‘brains’…
Dude, with all due respect, your problem may be more than just basic comprehension issues.

The article that YOU YOURSELF posted….
States that the N58 billion was spent to produce N1.06 trillion in banknotes - in 2020!!

See YOUR OWN article: https://economicconfidential.com/2021/11/cbn-spends-print-naira/
>

The article was written in November 2021 which was almost close to 2022, where all the Forex disappeared! You and Emefiele dey craze.

otunbakolawole:
My father came back from England in 1975 after studying there for almost 10 years. He was happy to come back and rushed back home. People of his age then all rushed back because the naira was two to $1. You could buy a new car for an amount you can’t even buy a tyre for today. So, you can see the importance of money. The brain drain was to our side (towards Nigeria). But the moment the money started getting useless — in other words, you have to work 10 times more to get the same thing, because of the fact that your money has been eroded and people say, "am working so hard, and I am only earning peanuts" — the brain drain started.

The point I am trying to make is, the first lesson of governance is the fear of inflation. And what is inflation? Inflation means that you are not managing your money supply very well. An Inflation rate as high as 25 per cent means that in four years, the money they are paying you at that time will not buy you a single loaf of bread because inflation has been taking out 25 per cent each year. An example is pensioners who may be earning static salaries. So, if you’re not getting 25 per cent increase in salaries annually, it means that in four years’ time, the money is nothing.

We need to tackle the inflation menace head on. We can't shy away from it. All these trial and error economics won't save us if we don't fasten our belts and get serious.

Ogogoro economics. Inflation could come from laziness. Ephesians 4:28 puts it another way.

Flets:
Even when everyone knows it’s against the interest of Nigeria, Tinubu will do it….. and this is why

The West has got the President they need to do all their bidding. They've got Tinubu by the balls .... they have all his dossier ranging from the drug activities to fake identitiy, fake education, rigged election etc. The West got their best puppet.

TINUBU HAS NO OPTION THAN DO THE BIDDING OF THE WEST. Otherwise, he loses it all.

All policies implemented by Tinubu are per IMF and world bank recommendations and aimed at further impoverishing the Nigerian people further like they do to all third world countries.

Only Nigerians can save themselves by taking their country back

sometimes no b d west govt dey behind sometimes na one rich investor were one profit from our banking situatn eg if u have watch dis series called billions there pne episode abput nigeria cbn trying to devalving nsira nd d oyinbo crone hedge investment broker wanted to bet against naira in forex trading to make huge mpney in dollars by going for investors nd advising cbn to devalue.afte watching dt episode i knew dt such an advice frm bank of america is nt for our goods butfor some investor overseas dt wat to profit from it

airsaylongcome:


Swerve commot here. If u dey suffer no carry your suffer come dey talk for my front. I'm not suffering and that's on period

Lol.

You think it's about you?

I'm speaking for the 100million Nigeirans that have been thrown into multidimensional poverty in the last decade.

Obviously you're high on whatever you think you are but I assure you, Nigeria will happen to you soon and you will have no one to speak for you, by the name of the Lord I serve!

Your statement epitomises the average Nigerian - as long as I'm fine others can go to hell.

A very immature, myopic, uncivilised and hobesian state of mind.

You're lower than the lowest species of homo sapiens!

I will not bother reading whatever tripe you respond with, you're not worthy of one more second of my time.

TheRealestGuy:


Lol.

You think it's about you?

I'm speaking for the 100million Nigeirans that have been thrown into multidimensional poverty in the last decade.

Obviously you're high on whatever you think you are but I assure you, Nigeria will happen to you soon and you will have no one to speak for you, by the name of the Lord I serve!

Your statement epitomises the average Nigerian - as long as I'm fine others can go to hell.

A very immature, myopic, uncivilised and hobesian state of mind.

You're lower than the lowest species of homo sapiens!

I will not bother reading whatever tripe you respond with, you're not worthy of one more second of my time.

Complete and utter gibberish. Get out of my mentions

This economics advice/forcast seems unfortunate..

Am speechless

chatinent:
Special greetings to awon “this government will favour me and my family.“

How is the family?


Ina kwana, ụtụtụ ọma o, e kaaro o! Day just break!

As a JW, you act like you care less about the Govt but you're quick to attack anythings other igbos dont support
I no say say tribalistic JW dey o...SMH

DOptical:

The article was written in November 2021 which was almost close to 2022, where all the Forex disappeared! You and Emefiele dey craze.

Another “craze” folk who read headlines but not articles themselves…

The article was written in November 2021, about the CBN’s activities in the PREVIOUS YEAR of 2020….
Meanwhile, Buhari/Emefiele’s Naira redesign was launched in Nov 2022 - A FULL YEAR AFTER the article was written.

What an irony that YOU YOURSELF produced documented evidence of YOUR OWN cluelessness!
>

9jaRealist:


Another “craze” folk who read headlines but not articles themselves…

The article was written in November 2021, about the CBN’s activities in the PREVIOUS YEAR of 2020….
Meanwhile, Buhari/Emefiele’s Naira redesign was launched in Nov 2022 - A FULL YEAR AFTER the article was written.

What an irony that YOU YOURSELF produced documented evidence of YOUR OWN cluelessness!
>

I don't care about whatever activities the article was disclosing, even as I didn't even bother to read it at first but my major point even after I read the article, was how the forex disappeared within one year. Only a retard would support such daredevil looting.

t2luv1:
How? BOA is wrong on this one. The single most important that has a correlation effect on Nigeria's economy is the Forex exchange. 80% of Nigeria's consumable goods are imported.

And you won’t be able to attract massive forex inflow in a negative real interest rate environment…
>

DOptical:
I don't care about whatever activities the article was disclosing, even as I didn't even bother to read it at first but my major point even after I read the article, was how the forex disappeared within one year. Only a retard would support such daredevil looting.

True confession at last…
But no need to resort to childish Strawman’s Argument.

Let’s review the actual points I made…
1) It’s beer parlor rumor that the CBN spent 44/58 billion DOLLARS to print banknotes…
2) Nigeria does not have 44/58 billion DOLLARS in its foreign reserves…
3) Even though not my point, spending N58 billion to produce N1.06 billion is about 5%…

The article YOU YOURSELF produced validated everything I wrote...
Next time, stay out of beer parlors and stick with what you actually know.
>

9jaRealist:


True confession at last…
But no need to resort to childish Strawman’s Argument.

Let’s review the actual points I made…
1) It’s beer parlor rumor that the CBN spent 44/58 billion DOLLARS to print banknotes…
2) Nigeria does not have 44/58 billion DOLLARS in its foreign reserves…
3) Even though not my point, spending N58 billion to produce N1.06 billion is about 5%…
4) The article YOU YOURSELF produced proved YOUR OWN cluelessness.

Next time, stay out of beer parlors and stick with what you actually know.
>

Nigerians had 45 billions dollars in her reserves in 2020! Emefiele dilapidated it. He must spit it out or sit his ass in prison!

DOptical:
Nigerians had 45 billions dollars in her reserves in 2020! Emefiele dilapidated it. He must vomit it or sit his ass in prison!

Strawman’s Argument…

Which wan concern Agbero with overload…
Please feel free to go inform the court that would be trying Emefiele.
>

9jaRealist:


Strawman’s Argument…

Which wan concern Agbero with overload…
Please feel free to go inform the court that would be trying Emefiele.

Nonetheless, just for the record (messing with you is extra )…
Nigeria had LESS than $30 billion in reserves when Emefiele was appointed CBN Gov in June 2015.

See linked article: https://economicconfidential.com/2021/12/jonathan-handed-buhari/
>

Yeah I know that. One of the reasons why Jonathan was booted out while Madueke was about to be nabbed before she ran away and keeps running from one country to another like a refugee. Peter Obi is also linked to Madueke's corruption btw.

Emefiele simply did the same thing Madueke did by looting our treasury. From 2015-2019, the Forex treasury grew to 45 billion dollars, with the help of the previous finance minister who was also the chairman of the board of the banks. After the finance minister left, the forex became stagnant and nothing else was accrued from 2019 upwards but looting became everyday event by the people in charge of it. Looted our treasury box to the very least. Heck, he bought forms to contest while looting our treasury. The audacity! He should spit it out or sit his ass in the prison.

Flets:
Even when everyone knows it’s against the interest of Nigeria, Tinubu will do it….. and this is why

The West has got the President they need to do all their bidding. They've got Tinubu by the balls .... they have all his dossier ranging from the drug activities to fake identitiy, fake education, rigged election etc. The West got their best puppet.

TINUBU HAS NO OPTION THAN DO THE BIDDING OF THE WEST. Otherwise, he loses it all.

All policies implemented by Tinubu are per IMF and world bank recommendations and aimed at further impoverishing the Nigerian people further like they do to all third world countries.

Only Nigerians can save themselves by taking their country back

How then can Nigeria take back their country?

This Bank of America are just saboteurs. The inflation in Nigeria is not Demand-Pull inflation. It is supply-pull. It is not as a result of too much demand as people cant even buy, it is as a result of very low supply. The supply chain should be worked on.

TheBillyonaire:


Increasing interest rates and tax rates due to inflation is basic, but at the moment, the inflation is not caused by excessive liquidity in the system so mopping up liquidity is not a good idea.

More people are not able to fill their car tanks, generators and those are indicators of rising cost of energy, that does not look like a country with supplusity of cash as a driving force on cost of living.

What Nigeria needs is developing and sustaining manufacturing and exporter capacities, massive construction drives and developing our tourism to keep currency flowing through people's hands.

So, BoA is called Bank of America and should focus on America.

Ratings from institutions like BofA...and JP Morgan and Goldman Sachs and IMF are the ones that determine the level of investment in the Nigerian economy.

These institutions told Nigerians in 2012 that retaining the fuel subsidy would harm the economy. Nigerians rejected the advice and in 2015 voted for a President and party that denied even the existence of the subsidy. Who was right and who was wrong?

It only took 10 years from that point for fuel subsidy to BANKRUPT Nigeria. Patriotism and pride are not ECONOMIC measures or financial fundamentals. Keep up the resistance to common sense, be assured the outcomes are INEVITABLE.

Good Luck to Nigeria.

Obviously, they are tired of seeing us helpless.

Nigerians really need intellectual development; and Africa as a whole.
Meanwhile Academic and intellectual learning is going down daily.


Handling leadership in a democratic government is just hard for us.

Imagine Tinubu, Obi or Atiku.

IbeOkehie:


Ratings from institutions like BofA...and JP Morgan and Goldman Sachs and IMF are the ones that determine the level of investment in the Nigerian economy.

These institutions told Nigerians in 2012 that retaining the fuel subsidy would harm the economy. Nigerians rejected the advice and in 2015 voted for a President and party that denied even the existence of the subsidy. Who was right and who was wrong?

It only took 10 years from that point for fuel subsidy to BANKRUPT Nigeria. Patriotism and pride are not ECONOMIC measures or financial fundamentals. Keep up the resistance to common sense, be assured the outcomes are INEVITABLE.

Good Luck to Nigeria.

Your knowledge of macro-economics is limited. If you raise the interest rates, it will further escalate inflation on consumer goods prices yet the minimum wage can not afford support basic living.

You can not mop up liquidity in an economy that has no excess liquidity. The funds are in the hands of the one percent. 99% will suffer.

BoA is ignorant of the issue on ground, so their solution recommendation is a basic text book recommendation which I know, but will not work. It is a solution but not the solution for now.

2mch:

America’s interest rate is only at 5% and it is struggling g.

America is a mature econom
With maximum competition
Nigeria is just starting
You can make 400% profit in Nigeria
You can't In America
That's the difference
But Ppl borrow for wrong things like housing instead of production (Agricand manufacturing that can absorb that interest rate)
It's demand for 2nd supply of capital
If you don't start you will never reach equilibrium

Imagine what at 25% interest rate will do to Nigeria



It will force Ppl to invest in Agric or manufacturing not sales and empty frivolous luxury housing



. Nigeria need to start it’s own banking analysts and rating agencies to in turn rate all these foreign company’s for African investment

hahahahahhahahahahhahahahahhahahahah
You funny
So that can't feed themselves or secure themselves want to Rate Ppl who can
Very funny

. Otherwise they will soon turn around and downgrade Nigeria investments or bonds to force implementation of policies to which they can exploit the country. That is always the next move!

that's their job, it's yours to outplay them instead of hoping they are your friends
It's dog eat dog out in the real world

Buddha3:


Please, kindly prove me wrong. Explain to the reading public how our Nigerian reality has ever been different from what I just detailed here.

When the white men were running things and before oil we did the needful and produced (groundnut, palm oil, cocoa, cotton) which was reflected in our exchange rate and standard of living
Everything went downhill when we started dashing Ppl free education, free loan, free job without looking at demand and supply


Natural laws are enforced whether you like it or not
No need for guns there

Kalvan:


This is the pov I’ve been searching the thread for. Hiking the interest rate is a useful tool when inflationary pressures are caused by excess liquidity, but Nigeria’s inflation is almost entirely caused by supply side disruptions.

It is no secret that Buhari borrowed heavily from the CBN (which was illegal by the way) and such spending is inflationary.

So what do you mean by "supply side disruptions"?