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Nairaland Forum / Nairaland / General / Business / Bank Of America Urges Nigeria To Hike Interest Rate To 25.5% To Curb Inflation (22181 Views)
CBN Raises Interest Rate To 26.25 % Amid Soaring Inflation Levels / Crypto King, Sam Bankman-Fried Sentenced To 25 Years In Prison / CBN Raises Interest Rate To 15.5% To Curb Rising Inflation (2) (3) (4)
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Re: Bank Of America Urges Nigeria To Hike Interest Rate To 25.5% To Curb Inflation by mapist(m): 12:58am On Jul 04, 2023 |
TheBillyonaire: You forgot the most important - SECURITY for the food producing areas. |
Re: Bank Of America Urges Nigeria To Hike Interest Rate To 25.5% To Curb Inflation by Caseless: 1:14am On Jul 04, 2023 |
iammo: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? |
Re: Bank Of America Urges Nigeria To Hike Interest Rate To 25.5% To Curb Inflation by grandstar(m): 2:15am On Jul 04, 2023 |
iammo: 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. 4 Likes 4 Shares |
Re: Bank Of America Urges Nigeria To Hike Interest Rate To 25.5% To Curb Inflation by TheBillyonaire: 4:27am On Jul 04, 2023 |
mapist:How is that relate to the Op'ed message? |
Re: Bank Of America Urges Nigeria To Hike Interest Rate To 25.5% To Curb Inflation by t2luv1: 4:28am On Jul 04, 2023 |
BigDawsNet: 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. |
Re: Bank Of America Urges Nigeria To Hike Interest Rate To 25.5% To Curb Inflation by ruffhandu: 6:18am On Jul 04, 2023 |
Flets: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. |
Re: Bank Of America Urges Nigeria To Hike Interest Rate To 25.5% To Curb Inflation by mapist(m): 7:01am On Jul 04, 2023 |
TheBillyonaire: 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". |
Re: Bank Of America Urges Nigeria To Hike Interest Rate To 25.5% To Curb Inflation by grandstar(m): 7:03am On Jul 04, 2023 |
oluwaseyi0: 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. 2 Likes |
Re: Bank Of America Urges Nigeria To Hike Interest Rate To 25.5% To Curb Inflation by grandstar(m): 7:22am On Jul 04, 2023 |
otunbakolawole: 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 3 Likes |
Re: Bank Of America Urges Nigeria To Hike Interest Rate To 25.5% To Curb Inflation by Bolaji1996: 8:00am On Jul 04, 2023 |
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: |
Re: Bank Of America Urges Nigeria To Hike Interest Rate To 25.5% To Curb Inflation by DOptical: 8:26am On Jul 04, 2023 |
9jaRealist: The article was written in November 2021 which was almost close to 2022, where all the Forex disappeared! You and Emefiele dey craze. |
Re: Bank Of America Urges Nigeria To Hike Interest Rate To 25.5% To Curb Inflation by CodeTemplar: 10:14am On Jul 04, 2023 |
otunbakolawole:Ogogoro economics. Inflation could come from laziness. Ephesians 4:28 puts it another way. |
Re: Bank Of America Urges Nigeria To Hike Interest Rate To 25.5% To Curb Inflation by Ogaonos: 11:12am On Jul 04, 2023 |
Flets: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 1 Like |
Re: Bank Of America Urges Nigeria To Hike Interest Rate To 25.5% To Curb Inflation by TheRealestGuy(m): 12:13pm On Jul 04, 2023 |
airsaylongcome: 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. 1 Like |
Re: Bank Of America Urges Nigeria To Hike Interest Rate To 25.5% To Curb Inflation by airsaylongcome: 12:21pm On Jul 04, 2023 |
TheRealestGuy: Complete and utter gibberish. Get out of my mentions |
Re: Bank Of America Urges Nigeria To Hike Interest Rate To 25.5% To Curb Inflation by MamaletASO: 12:22pm On Jul 04, 2023 |
This economics advice/forcast seems unfortunate.. Am speechless
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Re: Bank Of America Urges Nigeria To Hike Interest Rate To 25.5% To Curb Inflation by DevilsEqual(m): 12:46pm On Jul 04, 2023 |
chatinent: 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 |
Re: Bank Of America Urges Nigeria To Hike Interest Rate To 25.5% To Curb Inflation by 9jaRealist: 2:05pm On Jul 04, 2023 |
DOptical: 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! > |
Re: Bank Of America Urges Nigeria To Hike Interest Rate To 25.5% To Curb Inflation by DOptical: 2:12pm On Jul 04, 2023 |
9jaRealist: 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. |
Re: Bank Of America Urges Nigeria To Hike Interest Rate To 25.5% To Curb Inflation by 9jaRealist: 2:17pm On Jul 04, 2023 |
t2luv1: And you won’t be able to attract massive forex inflow in a negative real interest rate environment… > |
Re: Bank Of America Urges Nigeria To Hike Interest Rate To 25.5% To Curb Inflation by 9jaRealist: 2:26pm On Jul 04, 2023 |
DOptical: 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. > |
Re: Bank Of America Urges Nigeria To Hike Interest Rate To 25.5% To Curb Inflation by DOptical: 2:30pm On Jul 04, 2023 |
9jaRealist: Nigerians had 45 billions dollars in her reserves in 2020! Emefiele dilapidated it. He must spit it out or sit his ass in prison! |
Re: Bank Of America Urges Nigeria To Hike Interest Rate To 25.5% To Curb Inflation by 9jaRealist: 2:44pm On Jul 04, 2023 |
DOptical: Strawman’s Argument… Which wan concern Agbero with overload… Please feel free to go inform the court that would be trying Emefiele. > 1 Like |
Re: Bank Of America Urges Nigeria To Hike Interest Rate To 25.5% To Curb Inflation by DOptical: 2:51pm On Jul 04, 2023 |
9jaRealist: 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. 1 Like |
Re: Bank Of America Urges Nigeria To Hike Interest Rate To 25.5% To Curb Inflation by NNEVERAGAINN: 3:23pm On Jul 04, 2023 |
Flets:How then can Nigeria take back their country? |
Re: Bank Of America Urges Nigeria To Hike Interest Rate To 25.5% To Curb Inflation by MomohMrMoore: 3:44pm On Jul 04, 2023 |
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. |
Re: Bank Of America Urges Nigeria To Hike Interest Rate To 25.5% To Curb Inflation by IbeOkehie: 5:40pm On Jul 04, 2023 |
TheBillyonaire: 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. |
Re: Bank Of America Urges Nigeria To Hike Interest Rate To 25.5% To Curb Inflation by Bfly: 6:02pm On Jul 04, 2023 |
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. 2 Likes |
Re: Bank Of America Urges Nigeria To Hike Interest Rate To 25.5% To Curb Inflation by TheBillyonaire: 6:45pm On Jul 04, 2023 |
IbeOkehie: 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. |
Re: Bank Of America Urges Nigeria To Hike Interest Rate To 25.5% To Curb Inflation by Cromagnon: 8:44pm On Jul 04, 2023 |
2mch: 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 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 1 Like |
Re: Bank Of America Urges Nigeria To Hike Interest Rate To 25.5% To Curb Inflation by Cromagnon: 8:47pm On Jul 04, 2023 |
Buddha3: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 |
Re: Bank Of America Urges Nigeria To Hike Interest Rate To 25.5% To Curb Inflation by grandstar(m): 11:25pm On Jul 04, 2023 |
Kalvan: 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"? 1 Like |
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