lasthero:
B


SMH, I think Economics should be made compulsory for everybody and every courses up to university level.


In a lay man explanation. When there are too much money in circulation or when there is a perceived inflation, government regulatory body increases interest rates to banks and bank increase interest rates to customers which reduces customer borrowing from banks and hence reduce money in circulation and reduces inflation.


On the other hand. When there are lesser money in circulation, govt reduces interest rates to banks and bank also reduce to loan borrowers to encourage loans.

In economics, it's explained in terms of bonds

Man, I had a B in Economics at SPC, Asaba. I'm a son of a chartered banker so I know what I'm saying. You simply gave a simplistic illustration.
When SMEs obtain loans at high interest rates what's the effect on the businesses and the final consumers?!
If businesses can't obtain loans because of high interest rates, what will be the effect on an economy that has almost zero government presence.
I'm simply sad that a man of Emefiele's stature is practising voodoo economics.
As for where the mopped money is going to, your guess is good as mine if you're sincere.

DeOTR:

Where exactly are you seeing the money in circulation? When most people can barely feed themselves?
Our over dependent on imported goods is the reason for the rise in prices of commodities, not because there's too much money in circulation.
Inflation and unemployment are supposed to move in different directions, which is not the case here.

You nailed it right
One country with two big and opposite problems

lasthero:
B


SMH, I think Economics should be made compulsory for everybody and every courses up to university level.


In a lay man explanation. When there are too much money in circulation or when there is a perceived inflation, government regulatory body increases interest rates to banks and bank increase interest rates to customers which reduces customer borrowing from banks and hence reduce money in circulation and reduces inflation.


On the other hand. When there are lesser money in circulation, govt reduces interest rates to banks and bank also reduce to loan borrowers to encourage loans.

In economics, it's explained in terms of bonds

Indeed, economics should be made mandatory in secondary schools...and folks like you should be grilled on it for the entirety of those 6years, so you can have a broader understanding of concepts.

This move by Godwin Emefiele is only aimed at providing temporary reprieve. Increased interest rates in lending isn't necessarily going to translate to a reduction in debtors and the quantity of money in circulation. Yes, some business persons may fiddle with the idea of borrowing less but that percentage is going to be infinitesimal. Rather, those business owners will go ahead to take the loans and let the increased interest rate translate to an increase in the prices of the goods they'll be importing and retailing to the ever consuming public, that way they'll easily fund the hiked interest rates, keep their businesses afloat, give the apex bank more money in the reserves or more to be re-looted as is the case with our finished country, while the general populace bears the painful brunt of this stupendous increment.

You can argue that this move further portrays Emefiele as an economic dunce, but I tell you, this is a very calculated move geared towards accruing more money for government officials to pillage considering the fact their administration is winding down. This move is simply made to mop up more monies into the pockets of a few, since their initial attempt at extra taxes was hugely rebuffed. They just found a subtle way to still extort you and me.

N/B: There's the need to remind you that 70% of major businessmen and women run their businesses on 40% of liquid capital and 60% of loans from banks. So do the maths.

LagbajaTheBEREAN:
I still don't get it, will the interest rates reflect on customer accounts?

No sir.
Interest rate and inflation goes in opposite directions or let’s say inversely proportional.
If there is inflation in a country - too many cash in the hand of people chasing fewer goods thereby driving the price of the goods up, cbn kicks in and raise interest rate to cub the menace.
It is one of the tools used to push back local currency again dollar and also brings down the price of commodities.
Examples -
Let’s assume cbn drops interest rate to 0.5%(this is what they use in Europe and US), it means cbn prints out money and give it to commercial banks at 0.5% and they the commercial banks will add there own (let’s say another 0.5% to make it 1% total because interest rate is the major source of revenue for banks to pay salaries and expand) and the push out this money and borrow citizens.
So in total, a Nigerian who goes to bank to borrow money to buy equipment for his business in china, the one that borrows to buy car,electronics at home, buy house on mortgage will only pay 1% per annum on the loan.
Imagine taking a 10m loan to build a small 2 bedroom flat payable in 20 years.
That is less than 12m in total to pay back in 20 years. It is attractive. Isn’t it?
The joy of having your home and paying back just )00k per annum or 50k per month.
That means a family where the hubby earns 100k and wife earns 50k can easily pay their house mortgage of 50k per month while still have 100k to feed the home.
This is the reality with most people abroad.
They live on loans. Cheap loans.
So attractive and very easy to get into and you work your entire life servicing loans and praying you don’t lose your job or get laid off.
Segun travels to america and within 6 months uploading his car and house. Meanwhile he will have to work next 20 years clearing it.
Now
In the cbn decides to raise interest rate from 0.5% to 15% just like nigeria. Banks will add theirs factoring in yearly inflation rate of 10-15%. They want to make money and profit too
So first they won’t borrow you a long term loan because you will default and may not be able to pay back. Also by the time you pay back, the purchasing power of the initial money borrowed you would have eroded thereby literally leading to loss for them.
So they give out loans as high as 25-30% interest because they need to make profit too.
People will avoid taking loans which in turn will drop consumer goods demand.
And since demand for commodities have dropped because people don’t have access to loans, producers don’t have a choice than to keep lowering their prices.
Inflation has been curbed but such society hardly grows.
Reason while you don’t see Nigerians taking loans to build houses or buy cars on a long term to ease their pressure thereby making the society to develop.
A 25% interest rate means a 10m loan you take to build your 2 bedroom flat payable in 20 years will result to you paying back 50-60m in 20 years.
Who does that? How is that possible to pay back? Instead of paying 60mback in 20 years, why not just I mould my blocks slowly slowly as the money dey enter they build am small small.
Reason why you see nigeria so littered with incompleted buildings or people moving into shambolic buildings where they use the wife wrapper to cover the windows, unplastered walls, planks to cover windows pending when they have small cash to do some parts and many more.

lasthero:
B


SMH, I think Economics should be made compulsory for everybody and every courses up to university level.


In a lay man explanation. When there are too much money in circulation or when there is a perceived inflation, government regulatory body increases interest rates to banks and bank increase interest rates to customers which reduces customer borrowing from banks and hence reduce money in circulation and reduces inflation.


On the other hand. When there are lesser money in circulation, govt reduces interest rates to banks and bank also reduce to loan borrowers to encourage loans.

In economics, it's explained in terms of bonds

Who is printing too much money aka Ways and means?

Raising interest rates is two edge sword. Naira value will appreciate but it will kill existing jobs and probably the economy will slide into recession. America is in already in recession due to interest rate hike. I know people who had job offer withdrawal by companies and there is hiring freeze in most companies now.

Alexas58:
A very nice move to curb inflation and help raise the Naira.
Most people would not understand the implications of this, since they don’t understand how the forex market works

Na wa o, these leaders sef, Dem won finish person for this country.

By the time every multinational and businesses put am on top product/services. Na only God go help us.

What a country

LagbajaTheBEREAN:
I still don't get it, will the interest rates reflect on customer accounts?

That is why the developed countries run on Loans.
That is the number one factor driving their economy.
If you want US and Europe to crumble, increase there interest rate just to 5% per annum. Just 5.
People will start avoiding loans, there will be many defaults from individuals and big companies who have taken loans to establish expand.
It will result in job loss which in turn leads to more lower demand in goods and commodities which will continuously trigger more company close downs, more job losses and less demand for goods also.
That is why it takes very little to crumble such economies unlike we - he that is down needs fear, no fall na him be our own.

Alexas58:
A very nice move to curb inflation and help raise the Naira.
Most people would not understand the implications of this, since they don’t understand how the forex market works

Tell us the implications, please we want to learn from your economic policies!

There is no benefit of raising interest rate now as we speak, is complete madness you want to further contract an economy that is having this high level of unemployment and hunger..you want the middle class and low class to depend only on salary as small business will gradually die off..any country wey carry politics enter it's fiscal and monetary policy will never survive in the long term..they are going to completely wipe out the middle class,..

xandy84:
Raising interest rates is two edge sword. Naira value will appreciate but it will kill existing jobs and probably the economy will slide into recession. America is in already in recession due to interest rate hike. I know people who had job offer withdrawal by companies and there is hiring freeze in most companies now.

Guyman01:
And Keyamo will open his loud mouth to tell us that all those endorsed by Afenifere failed to win in previous presidential elections. That should be a mark of respect and a badge of honour for those Yoruba elders.
Keyamo doesn't realise that what an elder sees while sitting on a chair, a youth may never see it even if he climbs an Iroko tree.

If we had listened to these elders in 2015 and 2019 and refused to follow the person who repackaged a failed former military Head of State who since he left office in 1984 could only boast of 150 cows as assets, a Buhari who didn't belong to the board of any company,
who didn't start any foundation even if it's to take Almajiris out of the street,
who didn't write a single book,
who didn't get any new academic qualifications except his controversial military training that got him to the rank of General,
a man who didn't establish any single factory that employed anyone nor a farm holding that produces even if it's eggs like Obasanjo farms,
a man that all he had was fake and questionable acclaim of integrity which Nigerians didn't accept in 2003, 2007, 2011 until he was repackaged by one of the current candidates in conjunction with Obama Campaign Manager David Axelrod as a conduit to achieving his own personal ambition in 2023 we won't be in this mess that all we get is daily pressing of our necks.

I have made up my mind on who among the contestants has the greater potential to turn the country around for good. You can choose your own candidate but do so wisely.

A lot of my friends have Japa from the country already, others are staying back just on a tinge of hope inspired by one of the presidential candidates and if he fails because we usually vote out of tribal and religious sentiments many of them will join the Japa gang next year.

Most youths I meet on the street will tell you that Nigeria don cast, they are not seeing any hope but whenever they watch videos of the most vocal presidential candidate about Nigeria situation and ways of solving the myriad of problems they see a tinge of hope in Nigeria.

Please choose wisely, me that is writing this is not finding things easy in this country but there's hope and to the OP pouring out his heart in a previous thread about loosing his job please don't give up, I can personally feel your pains just like many others because hopes of finding another job is slim, but don't give up, God will not forsake you.

You better Japa now, if your hope is actually based on your statement "A lot of my friends have Japa from the country already, others are staying back just on a tinge of hope inspired by one of the presidential candidates and if he fails because we usually vote out of tribal and religious sentiments many of them will join the Japa gang next year."

Because your supposedly savior is not going to win, hence no need to wait to move. Please do so as soon as you can.

Ex0rrcist:
Oga devalue the currency, let's know where we are headed. An economy with two exchange rate is bound to collapse, ask Sri Lanka. Devalue the currency to meet the current market rate, so this will enable him to control the situation. But no, mumu man working for mumu president with stupid economic decisions. Can't wait for the next dispensation, honestly this government is really terrible.

If not for the high level of corruption going on in this government, haven't they suppose to remove subsidy by now. Dollar is 725, they exchanged dollar at 425 among themselves, since they are only there to add to our woes. How will they even understand the pains of ordinary Nigerians hustling under the hot sun when all they do is antipeople.

No sir. If the cbn moves the forex rate close to black market, the abokis will move their own again to like 850 to make it attractive to people.
Because there is no point changing money from aboki if the forex rate is close.
People will start looking at security, it is a risk changing money with abokis because you can be attacked after changing money, abokis can give you fake notes. So why taking such risk when there is little difference between the two exchange rates? But presently, the risk is worth it.
So cbn moving it closer to black market will only cause more disasters

Honestly, the man at the helms of affairs of CBN, Emefiele has overstayed and lost bearing on how to manage
Nigerians finances and monetary policies....
Dont forget our sick Naira died and is about to be buried during his tenure..

So, this type of fire-brigade abracadabra cannot help this Country's dead Naira to rise under Emefiele
Buhari, if you too has not lost clue of RULERSHIP, the time is overripe for the sack of the clueless CBN Governor
Else, the Naira will be finally burried under your watch as the worst president Nigeria ever produced....Tufiakwa!

Hopefully the next president and administration immediately sacks CBN Governor Godwin Emefiele. He's been in there too long and his performance has been totally abysmal for the masses.

Alexas58:
A very nice move to curb inflation and help raise the Naira.
Most people would not understand the implications of this, since they don’t understand how the forex market works

in your learned opinion professor...what is the importance of this increase in the life of the economy since 2015?

Alexas58:
A very nice move to curb inflation and help raise the Naira.
Most people would not understand the implications of this, since they don’t understand how the forex market works

.... my friend sharrap you think say na only you go school, you raise it interest rate, you squeeze liquidity, people purchasing power go reduce, inflation go come down.

lasthero:
B


SMH, I think Economics should be made compulsory for everybody and every courses up to university level.


In a lay man explanation. When there are too much money in circulation or when there is a perceived inflation, government regulatory body increases interest rates to banks and bank increase interest rates to customers which reduces customer borrowing from banks and hence reduce money in circulation and reduces inflation.


On the other hand. When there are lesser money in circulation, govt reduces interest rates to banks and bank also reduce to loan borrowers to encourage loans.

In economics, it's explained in terms of bonds

I weak for all these fake economics! Who told u and Emeifele that excess liquidity is caused by citizen’s borrowings? Aside big businesses thin capitalizing, like Dangote. Who else is borrowing? Or wen was the last time u took a bank loan? Oga face the truth! Do you know how much political parties have spent on their conventions alone this yr? Political spending is d major culprit and interest rate can’t stop it. They just want to suffocate SMEs dat do one or two things with banks!

Alexas58:
A very nice move to curb inflation and help raise the Naira.
Most people would not understand the implications of this, since they don’t understand how the forex market works

Mumu. Na everybody dey do forex market?

lasthero:
B


SMH, I think Economics should be made compulsory for everybody and every courses up to university level.


In a lay man explanation. When there are too much money in circulation or when there is a perceived inflation, government regulatory body increases interest rates to banks and bank increase interest rates to customers which reduces customer borrowing from banks and hence reduce money in circulation and reduces inflation.


On the other hand. When there are lesser money in circulation, govt reduces interest rates to banks and bank also reduce to loan borrowers to encourage loans.

In economics, it's explained in terms of bonds

in lay man term,there is no justification for failure..Na only you study economics at university level qua......does buhari and cbn no what is bond's.. Abeg leave story..Cunning die,cunning man Bury am..this are the legacies of APC

Buddha3:


Indeed, economics should be made mandatory in secondary schools...and folks like you should be grilled on it for the entirety of those 6years, so you can have a broader understanding of concepts.

This move by Godwin Emefiele is only aimed at providing temporary reprieve. Increased interest rates in lending isn't necessarily going to translate to a reduction in debtors and the quantity of money in circulation. Yes, some business persons may fiddle with the idea of borrowing less but that percentage is going to be infinitesimal. Rather, those business owners will go ahead to take the loans and let the increased interest rate translate to an increase in the prices of the goods they'll be importing and retailing to the ever consuming public, that way they'll easily fund the hiked interest rates, keep their businesses afloat, give the apex bank more money in the reserves or more to be re-looted as is the case with our finished country, while the general populace bears the painful brunt of this stupendous increment.

You can argue that this move further portrays Emefiele as an economic dunce, but I tell you, this is a very calculated move geared towards accruing more money for government officials to pillage considering the fact their administration is winding down. This move is simply made to mop up more monies into the pockets of a few, since their initial attempt at extra taxes was hugely rebuffed. They just found a subtle way to still extort you and me.

N/B: There's the need to remind you that 70% of major businessmen and women run their businesses on 40% of liquid capital and 60% of loans from banks. So do the maths.

Thank you.
Emefiele and buhari has killed us.

emmaodet:


No sir.
Interest rate and inflation goes in opposite directions or let’s say inversely proportional.
If there is inflation in a country - too many cash in the hand of people chasing fewer goods thereby driving the price of the goods up, cbn kicks in and raise interest rate to cub the menace.
It is one of the tools used to push back local currency again dollar and also brings down the price of commodities.
Examples -
Let’s assume cbn drops interest rate to 0.5%(this is what they use in Europe and US), it means cbn prints out money and give it to commercial banks at 0.5% and they the commercial banks will add there own (let’s say another 0.5% to make it 1% total because interest rate is the major source of revenue for banks to pay salaries and expand) and the push out this money and borrow citizens.
So in total, a Nigerian who goes to bank to borrow money to buy equipment for his business in china, the one that borrows to buy car,electronics at home, buy house on mortgage will only pay 1% per annum on the loan.
Imagine taking a 10m loan to build a small 2 bedroom flat payable in 20 years.
That is less than 12m in total to pay back in 20 years. It is attractive. Isn’t it?
The joy of having your home and paying back just )00k per annum or 50k per month.
That means a family where the hubby earns 100k and wife earns 50k can easily pay their house mortgage of 50k per month while still have 100k to feed the home.
This is the reality with most people abroad.
They live on loans. Cheap loans.
So attractive and very easy to get into and you work your entire life servicing loans and praying you don’t lose your job or get laid off.
Segun travels to america and within 6 months uploading his car and house. Meanwhile he will have to work next 20 years clearing it.
Now
In the cbn decides to raise interest rate from 0.5% to 15% just like nigeria. Banks will add theirs factoring in yearly inflation rate of 10-15%. They want to make money and profit too
So first they won’t borrow you a long term loan because you will default and may not be able to pay back. Also by the time you pay back, the purchasing power of the initial money borrowed you would have eroded thereby literally leading to loss for them.
So they give out loans as high as 25-30% interest because they need to make profit too.
People will avoid taking loans which in turn will drop consumer goods demand.
And since demand for commodities have dropped because people don’t have access to loans, producers don’t have a choice than to keep lowering their prices.
Inflation has been curbed but such society hardly grows.
Reason while you don’t see Nigerians taking loans to build houses or buy cars on a long term to ease their pressure thereby making the society to develop.
A 25% interest rate means a 10m loan you take to build your 2 bedroom flat payable in 20 years will result to you paying back 50-60m in 20 years.
Who does that? How is that possible to pay back? Instead of paying 60mback in 20 years, why not just I mould my blocks slowly slowly as the money dey enter they build am small small.
Reason why you see nigeria so littered with incompleted buildings or people moving into shambolic buildings where they use the wife wrapper to cover the windows, unplastered walls, planks to cover windows pending when they have small cash to do some parts and many more.

Here u are! U say Inflation and interest rate move opposite direction and inversely related. Only for u to explain a direct relationship and moving in the same direction. One go up, d other go up too. And one go down, the other go down. That’s directly proportional

Krismas:
I weak for all these fake economics! Who told u and Emeifele that excess liquidity is caused by citizen’s borrowings? Aside big businesses thin capitalizing, like Dangote. Who else is borrowing? Or wen was the last time u took a bank loan? Oga face the truth! Do you know how much political parties have spent on their conventions alone this yr? Political spending is d major culprit and interest rate can’t stop it. They just want to suffocate SMEs dat do one or two things with banks!

They borrow in their dreams.
Nigerian banks don't lend money to middle class not to talk of poor people. But na we go suffer the consequences at the end.

Alexas58:
A very nice move to curb inflation and help raise the Naira.
Most people would not understand the implications of this, since they don’t understand how the forex market works

Please explain to me like a 5yr old, why increasing interest rate to 15.5% will help curb inflation in a country with it's economy almost at comatose.
Empirically verifiable Citations will be highly appreciated, especially in developing countries such as ours.

Thanky

Best Regards

SIMONEKPA7:
Emefiele is a disaster

Worst CBN governor ever happened to Nigeria.
Soludo would have salvaged the Naira with his revaluation exercise shortly after Obasanjo paid our external debt.
The useless Fulani oligarchy frustrated him and the slowpoke disaster called Yaradua plunged us into debt within his miserable illness and the dumb and ineffectual buffon Jonathan nailed Nigeria into abyss with no thanks to Sanusi economic disaster as CBN Governor.
God will not forgive those people that negotiated a country Nigeria.
Great Britain will fall and the knowledge they used to set Nigeria will work against them. GB Pound will become useless and worthless. Britain will fall and no help will come their way.
Europe will witness disasters for conspiring against God own Nigeria.
Disaster is awaiting any country that conspire against his own.
The world is confused and the confusion will bring prosperity on the people that serve and know God in truth and in spirit.
It shall come to pass that, "The Egyptians we see today, we shall see them no more"
Who is greater than God?
The people whose destinies are chained in Nigeria shall be set free and their lands shall rejoice and serve the true God again.
Let the children of the living God rejoice.
Amen and Amen.

Borntosmoke:
Naira will gain value nw.

How? Kindly break it down in a layman's language

Krismas:
Here u are! U say Inflation and interest rate move opposite direction and inversely related. Only for u to explain a direct relationship and moving in the same direction. One go up, d other go up too. And one go down, the other go down. That’s directly proportional

You raise interest rate (goes up) to bring down inflation rate (goes down). I think this explains it better.

Lol...it is the dollar that will determine if the bold is happening...like you said, no be naija we dey, where most consumables are imported? The dollar is now strong and closing the gap against the pound sterling...now i am crying...from 1.20/$1....is now 1.06/$1 this evening....

Vilgax:
scary stuff.
let's see if this can slow down inflation...

incase you don't really understand what this means, this na wetin dey sup.

when a central bank raise interest rate.
your normal bank will also respond by raising their own interest rate.
with higher interest rate, people will tend to spend less and demand for goods and services will also drop, which will cause inflation to fall.
When demand is low, most companies won't raise their prices in order to stay competitive. since prices of goods and services aren't increasing that fast, you've managed to reduce inflation.
this is how CBN raising interest rates is meant to curb inflation.
but na Naija we dey, our own economics dey always different.

Alexas58:
A very nice move to curb inflation and help raise the Naira.
Most people would not understand the implications of this, since they don’t understand how the forex market works

Exactly

Guyman01:
And Keyamo will open his loud mouth to tell us that all those endorsed by Afenifere failed to win in previous presidential elections. That should be a mark of respect and a badge of honour for those Yoruba elders.
Keyamo doesn't realise that what an elder sees while sitting on a chair, a youth may never see it even if he climbs an Iroko tree.

If we had listened to these elders in 2015 and 2019 and refused to follow the person who repackaged a failed former military Head of State who since he left office in 1984 could only boast of 150 cows as assets, a Buhari who didn't belong to the board of any company,
who didn't start any foundation even if it's to take Almajiris out of the street,
who didn't write a single book,
who didn't get any new academic qualifications except his controversial military training that got him to the rank of General,
a man who didn't establish any single factory that employed anyone nor a farm holding that produces even if it's eggs like Obasanjo farms,
a man that all he had was fake and questionable acclaim of integrity which Nigerians didn't accept in 2003, 2007, 2011 until he was repackaged by one of the current candidates in conjunction with Obama Campaign Manager David Axelrod as a conduit to achieving his own personal ambition in 2023 we won't be in this mess that all we get is daily pressing of our necks.

I have made up my mind on who among the contestants has the greater potential to turn the country around for good. You can choose your own candidate but do so wisely.

A lot of my friends have Japa from the country already, others are staying back just on a tinge of hope inspired by one of the presidential candidates and if he fails because we usually vote out of tribal and religious sentiments many of them will join the Japa gang next year.

Most youths I meet on the street will tell you that Nigeria don cast, they are not seeing any hope but whenever they watch videos of the most vocal presidential candidate about Nigeria situation and ways of solving the myriad of problems they see a tinge of hope in Nigeria.

Please choose wisely, me that is writing this is not finding things easy in this country but there's hope and to the OP pouring out his heart in a previous thread about loosing his job please don't give up, I can personally feel your pains just like many others because hopes of finding another job is slim, but don't give up, God will not forsake you.

..so why are they not supporting Atiku now as they did in 2019?

*in 9ice voice*

Nothing dey shock me again!
Nothing dey shark me again!

Interest rate dey here, ma fi ku sere.

I don’t see this working instead it gonna worsen it Nigerian economics is absolutely very different from the normal economics taught in school buharis tight policy is what lead to this starting from closing of border to ban on many imports good for instance the new ViN revaluation as dusty as drove prices of car up cars are bought over there with dollar with this there will be more increase in dollar demand while the customs claiming to make more revenue for the government things were at and equilibrium before all this polices and everything balanced each other but not any more.