Ok oooo

More money for loan operators

Victory662:
Somebody should explain this to me oo. I'm a lay man on this particular issue. How will this help our depreciating naira?

Lemme try

1. Increase in interest rate will slow down spending thereby reducing the volume of money in circulation.

2. It helps to increase the return (profits) on savings. If you Goan fix your money in the bank, your banks will pay you additional 22.7% of the amount you fixed in the bank after 1 years .
3. It will affect small and medium business aspirants who intend to loan money from the banks to start up their businesses (22.7%) interest rate nobi beans o .

4. It is one of the greatest weapon used by monetary policy makers to fight inflation in any economy.

5. It is beneficiary for those who have enough money to spare (they will be encouraged to save and earn more). But it is big wahala for those who need money to spend ( young business aspirants because they will have to pay more interest for any amount borrowed) and if the business fails, OYO!
In the case of our present economic reality, the aim of jacking up the interest rate is to mop up excess money in circulation by encouraging savings and reducing spendings while beating down inflation as much as possible .
I have mentioned some advantages and disadvantages for you.

Say me thank you

Make I no lie. I don't know what this means and how it affects me sha.

This is true. However, the other part you didnt mention is the part thatll cushion the effect of an increased interest rate on the economy. Therell be massive unemployment because businesses will struggle to cope with the high rates of lending, the economy will also contract as a result. Your theory on making bond yields thereby bringing in foreign investors will not happen because givernment has policies that makes it difficult for those guys to repatriate their profits. Lastly, the government needs to stimulate the economy by making electricity stable and cheaper, giving grants to small and medium scale enterprises, tax holidays for companies, fixing the insecurity problem and strengthening our road infrastructureall of which require deliberate investments that i dont see this government making. If they dont do this, any short term gains made by the naira will be lost in the long term. Unless they vontinue raising interest rates indefinitely

DeLaRue:
It is a double edge sword.

As CBN rate rises, commercial banks will increase savings/fixed deposit rates, thereby attracting more savers who will be locked into 12 months or more term.

This will indirectly reduce the money available for spending and thus reduce patronage of many goods. As traders and manufacturers wait to exploit consumers with predatory prices, less and less people will buy their goods. As their warehouses pile up with unsold goods, they'll have to reduce prices, thus helping to reduce inflation.

Increasing interest rate will also mean the government can issue bonds at rates that will be attractive to foreign investors. More dollars will flow into the country.

The bad news is:

As Cbn increases interest rate, banks too will increase there lending rate with the likely result that:

1. More businesses that depend on bank loans will lay off staff or even close down

2. There will be fewer new investments- businesses can't survive on 33% - 35% loan rate

3. More pain for the economy generally.

Unfortunately, with the amount of money printed by Mr Buhari's government, the CBN will have to keep increasing interest rate in order to mop up excess liquidity and control inflation.

Managing a large economy in times of crises is a sophisticated game of chess. For every positive steps, there are multiple potential negative consequences. There are usually no easy solutions.

Unfortunately for politicians, the public want solutions NOW or they dabaru everything and even call for coup

The public is not interested in, nor do they understand economic theories.

Seun:
Reduction in inflation.

It's a text book move...it sometimes or most times doesn't play out like that especially with a beast-like economy like ours..


By the way.....awon wèrèy wey dey form inflation controllers are no moping money..
They are still printing more and stealing

DeLaRue:
It is a double edge sword.

As CBN rate rises, commercial banks will increase savings/fixed deposit rates, thereby attracting more savers who will be locked into 12 months or more term.

This will indirectly reduce the money available for spending and thus reduce patronage of many goods. As traders and manufacturers wait to exploit consumers with predatory prices, less and less people will buy their goods. As their warehouses pile up with unsold goods, they'll have to reduce prices, thus helping to reduce inflation.

Increasing interest rate will also mean the government can issue bonds at rates that will be attractive to foreign investors. More dollars will flow into the country.

The bad news is:

As Cbn increases interest rate, banks too will increase there lending rate with the likely result that:

1. More businesses that depend on bank loans will lay off staff or even close down

2. There will be fewer new investments- businesses can't survive on 33% - 35% loan rate

3. More pain for the economy generally.

Unfortunately, with the amount of money printed by Mr Buhari's government, the CBN will have to keep increasing interest rate in order to mop up excess liquidity and control inflation.

Managing a large economy in times of crises is a sophisticated game of chess. For every positive steps, there are multiple potential negative consequences. There are usually no easy solutions.

Unfortunately for politicians, the public want solutions NOW or they dabaru everything and even call for coup

The public is not interested in, nor do they understand economic theories.

Succinctly put and well said, next news jare

DeLaRue:
It is a double edge sword.

As CBN rate rises, commercial banks will increase savings/fixed deposit rates, thereby attracting more savers who will be locked into 12 months or more term.

This will indirectly reduce the money available for spending and thus reduce patronage of many goods. As traders and manufacturers wait to exploit consumers with predatory prices, less and less people will buy their goods. As their warehouses pile up with unsold goods, they'll have to reduce prices, thus helping to reduce inflation.

Increasing interest rate will also mean the government can issue bonds at rates that will be attractive to foreign investors. More dollars will flow into the country.

The bad news is:

As Cbn increases interest rate, banks too will increase there lending rate with the likely result that:

1. More businesses that depend on bank loans will lay off staff or even close down

2. There will be fewer new investments- businesses can't survive on 33% - 35% loan rate

3. More pain for the economy generally.

Unfortunately, with the amount of money printed by Mr Buhari's government, the CBN will have to keep increasing interest rate in order to mop up excess liquidity and control inflation.

Managing a large economy in times of crises is a sophisticated game of chess. For every positive steps, there are multiple potential negative consequences. There are usually no easy solutions.

Unfortunately for politicians, the public want solutions NOW or they dabaru everything and even call for coup

The public is not interested in, nor do they understand economic theories.

Thank you sir. It is 5% ish in North America and people are wailing already.

Average Nigerian might not feel that much because we are not heavilyva credit based society where cars, houses and credit cards are loaned.

grandstar:


I pray it hits 30%.This will slow inflation down and make the Naira appreciate.

Hopefully it does that
Usually when you have a headache paracetamol works.
Usually......

Bevista:
Fairly bold move by CBN.
---
The interest rate was too low compared to inflation resulting in a negative yield on bonds. Government cannot be borrowing at such a low rate while causing huge inflation on the masses. It encourages financial rascality.
---
The negative yield was partly why many investors preferred to preserve their funds in USD resulting in the significant depreciation of the naira.
---
Let's hope the fiscal side (Wale Edun & Co) begin to act responsibly.

Yes.

DevilsEqual:
Waiting for obidients who would come here to call a verifiable stats some propaganda

Some emergency Economic analysts will come here to start propounding some theories on why this will is just smokescreen but na lie, Nigeria go rise for their presence


kudos Cardoso, Now its looking like we now know what to do to make things right

Last quarter of 2024 seems promising

Your words in bold agrees to the fact that this has been a useless govt with horrible policy makers all the while, reason we have had it this bad .

DevilsEqual:
Waiting for obidients who would come here to call a verifiable stats some propaganda

Some emergency Economic analysts will come here to start propounding some theories on why this will is just smokescreen but na lie, Nigeria go rise for their presence


kudos Cardoso, Now its looking like we now know what to do to make things right

Last quarter of 2024 seems promising

This one doesn't understand what they are saying o. Lol

grandstar:


I pray it hits 30%.This will slow inflation down and make the Naira appreciate.

At the cost of massive interest rate. Interest rate is vital for manufacturing, no?

But this will also mean that the banks will increase their rates to borrowing customers and on other financial products. In the long run, if people can't borrow to spend because of the huge interest rates, the economy still suffers for it?

What was the old rate?

MPR is 22% but unemployment is 4%

Nigeria magic. Let's chop this statistics, we don't need it.

Godfullsam:


Lemme try

1. Increase in interest rate will slow down spending thereby reducing the volume of money in circulation.

2. It helps to increase the return (profits) on savings. If you Goan fix your money in the bank, your banks will pay you additional 22.7% of the amount you fixed in the bank after 1 years .
3. It will affect small and medium business aspirants who intend to loan money from the banks to start up their businesses (22.7%) interest rate nobi beans o .

4. It is one of the greatest weapon used by monetary policy makers to fight inflation in any economy.

5. It is beneficiary for those who have enough money to spare (they will be encouraged to save and earn more). But it is big wahala for those who need money to spend ( young business aspirants because they will have to pay more interest for any amount borrowed) and if the business fails, OYO!
In the case of our present economic reality, the aim of jacking up the interest rate is to mop up excess money in circulation by encouraging savings and reducing spendings while beating down inflation as much as possible .
I have mentioned some advantages and disadvantages for you.

Say me thank you

Thank you. You do well

This is not really a good news, increase in interest rate is bad news for business owners esp the mega business owners that borrow from the banks, Small business owners as well won't see bank loan viable for their business either which means underemployment for some people. High Interest rate don't curb inflation. Nigeria banking system doesn't encourage savings either. What this will do is to decrease demand for goods as people spend less and that in turn will decrease inflation which I don't think will work in this case cos of obvious reasons

Victory662:
Somebody should explain this to me oo. I'm a lay man on this particular issue. How will this help our depreciating naira?

In our own language,this is just to discourage borrowing.
This is largely targeted at inflation to reduce the amount of money in circulation.
But in realistic terms don't expect any swift turnaround of the economy yet.
Going by the amount of basis points increment,it's just a medium term fix from the CBN just to see if inflation will slow down.
If it does, good for us.

We're finished

This reads like Latin to me. Can someone explain what they have done in layman's language?

This move indicates a significant tightening of monetary policy, it's likely aimed at addressing inflationary pressures or stabilizing the currency by making borrowing more expensive, thereby reducing consumer spending and inflationary pressures,but it can also have side effect on the economy by slowing down the growth of the economy and which can also increase the prices of goods.
Hmmmm i hope they thought about this before increasing MPR by 400bps of 18.75% to 22.75%.

What of during Obasanjo, Yaradua?

nairalanda1:


Because we had appreciable income from oil. Not anymore.

omowolewa:


CBN is withdrawing monies inncirculatuon by making it difficult for banks to push monies to circulation

So does that mean we won't be able to withdraw cash again from the bank?

Head is paining me with all these technical lingo. I'm out

CodeTemplar:
Finally, they have given in to our textbook jargon experts. Let's see how the move goes.

Cc: grandstar, nairalanda1, omohayék

I don't see the difference it will make. The banks have not been interested in lending for a while so this is good for them. For the real economy though. It is tales of woe as the manufacturing sector will constrict further. Let's hope it tames inflation though. But is the source of inflation too much money as it is being touted?

Daystar7:
This is not really a good news, increase in interest rate is bad news for business owners esp the mega business owners that borrow from the banks, Small business owners as well won't see bank loan viable for their business either which means underemployment for some people. High Interest rate don't curb inflation. Nigeria banking system doesn't encourage savings either. What this will do is to decrease demand for goods as people spend less and that in turn will decrease inflation which I don't think will work in this case cos of obvious reasons

If they want to borrow at low rates they can go to an Islamic bank. If they want to raise long capital, they should issue raise it through equity or hybrid issue.

There is also still a fair amount of concessional loans out there if they can the narrative rate.

Nigerian biz will survive if not thrive. Its who we are.

nairalanda1:


Because we had appreciable income from oil. Not anymore.

You think inflation is as a result of budget deficits?

Octopusssy:
This reads like Latin to me. Can someone explain what they have done in layman's language?

The Central Bank of Nigeria raising the Monetary Policy Rate (MPR) to 22.75% means that borrowing costs have increased. This move is often made to control inflation by making it more expensive for banks to borrow money from the central bank, thereby reducing the amount of money in circulation and curbing inflationary pressures.

Octopusssy:
This reads like Latin to me. Can someone explain what they have done in layman's language?

It means that before you borrow to go and do "owambe", you need to think twice and leave borrowing to those who are interested in productivity. Infact, it should hit 30% by Q2.

DeLaRue:
It is a double edge sword.

As CBN rate rises, commercial banks will increase savings/fixed deposit rates, thereby attracting more savers who will be locked into 12 months or more term.

This will indirectly reduce the money available for spending and thus reduce patronage of many goods. As traders and manufacturers wait to exploit consumers with predatory prices, less and less people will buy their goods. As their warehouses pile up with unsold goods, they'll have to reduce prices, thus helping to reduce inflation.

Increasing interest rate will also mean the government can issue bonds at rates that will be attractive to foreign investors. More dollars should flow into the country.

The bad news is:

As Cbn increases interest rate, banks too will increase there lending rate with the likely result that:

1. More businesses that depend on bank loans will lay off staff or even close down

2. There will be fewer new investments- businesses can't survive on 33% - 35% loan rate

3. More pain for the economy generally.

Unfortunately, with the amount of money printed by Mr Buhari's government, the CBN will have to keep increasing interest rate in order to mop up excess liquidity and control inflation.

Managing a large economy in times of crises is a sophisticated game of chess. For every positive steps, there are multiple potential negative consequences. There are usually no easy solutions.

Unfortunately for politicians, the public want solutions NOW! or they dabaru everything and even call for coup

The public is not interested in, nor do they understand economic theories.

there is easy solution if they really know what they are doing but they don't want to do it. Emefiele knew he printed money and he needs to mop up the naira before Dec last year to control the effects of the printing but this same people fight that because they want to win election by sharing money unfortunately this is the consequence of that decision

grandstar:


I pray it hits 30%.This will slow inflation down and make the Naira appreciate.

I thought what was driving the cost of goods and services was the continously dropping of naira , will the rate stop naira fall or devaluation or will it make the cost of borrowing the valueless naira very high.