₦airaland Forum

Increasing interest rates helps curtail inflation and currency depreciation.

These have been major problems for Nigerians thus far.

dfrost:
Economists should help out here. How does this pan out for the common man on the streets?

when bank loan you money they charge you 12% when returning the money....una never seechomthing

*sighs. Sometin don already tight una still dey TIGHTEN am d more, It is well!

dyn1800:
Economist in the house should kindly explain the Good and Bad side of this policy

SECONDED!


As a Physicist, all dis big big money economics grammar is mumbo jumbo to my scientific ears

So what does this mean now? Economists interprete

Please some people with sound economics knowledge should explain the import of this policy

Trying so hard to comprehend

With the raise in MPR it is expected there will be increase on Interest Rate charged on loans by Commercial Banks

Good one in the short term but not really a good one long term.

Here's a breakdown of what's happening.

The economy is heading towards a recession and people taking advantage of the disparity in forex isn't helping matters. Hence the excess cash in the system leading to inflation.

Banks borrow from the CBN and they pay interest on what they borrow. The banks in turn lend the money to you and I and a certain interest is charged. I'm sure you are familiar with that.

Now, the CBN can reduce inflation by increasing their interest rates on money lent to banks so as to mop up excess cash in the system. To meet up, the banks increase their rates on whatever they lend to you as well as introduce all those hidden charges when you bank with them.
Now if my secondary school economics is still good enough, I believe these might be the likely implications:

1. The banks will increase their interest rate when you go to borrow from them.
2. Inflation will reduce in the nearest short term.
3. Because of the high interest rate, you will consider not borrowing from the banks.
4. This will result in the economy slowing down! The economy will look good on paper but the common man on the street will feel the pinch.

I have always canvassed that the way out of our impending recession is increased investment! That's what Soludo (God bless that man) canvassed for before he left office. Investment led by the manufacturing sector!! That's what the US did when its home market crashed because of the 2008 recession. If the govt stimulates the economy by entering into PPPs and other favorable policies, millions of jobs would be created, and taxes can be increased to checkmate any excess liquidity. At the end of the day, the inflation would be down, there would be jobs, the common man happy and the government too.

Win- Win Solutions!!!

Is money our problem, create Jobs for the masses, dis govt sha

emmykk:
when bank loan you money they charge you 12% when returning the money....una never seechomthing

U nah learner in Alh. Lie Mohamed skool of info

Can somebody help with explanations on both borrow and lending rate

Trying so hard to comprehend u

.... I dont trust this mans judgement. His policies always seem to be inconsistent with standard macro economic basis

This is stupidity of the highest order! This will only stifle the economy the more due to the fact that the inflation experienced in feb was not money supply induced! The inflation was as a result of the exchange rate vagories! People are already shouting that there's no more in the economy and here's our CBN increasing the MPR! I wonder where they studied their own economics oo! God 'll save our souls!

CBN causes inflation through its foreign exchange policy - then ups interest rates to combat it - Lol!

Increasing interest rates will increase the cost of borrowing - and if your a biz man that cost gets passed to your customers (more inflation!)

Such tricks can only be played on Nigerians!

BUHARINOMICS

Demallcrazy:
SECONDED!


As a Physicist, all dis big big money economics grammar is mumbo jumbo to my scientific ears

Same here oh as an ART student a Philosopher, economic mumbo jumbo sounds like Greek to me

I do not understand this our CBN at all. This policy somersault na wa o. Is the CBN governor confused??

Our economy needs to be stimulated with funds and low interest rates and the CBN is doing the opposite.

The current inflation was NOT caused by excess liquidity in the market, it was caused by the Naira exchange rate policy so that is what should be the focus to reduce inflation.

There is no money in the system and the CBN is making it more difficult to make money. I tire for this CBN governor o.

N

dyn1800:
Economist in the house should kindly explain the Good and Bad side of this policy

Why and what do you want to hear from the so called economist explanation. No good, ok. Simple, govt may think they gained by this robbry act, but the poor masses and the low income earners would grow poorer. People cannot asses credits and loans due to the cost, and those that dare will end up in increasing the cost of the products they produce. Some advance countries has their as low as 4 or 5%. Buhari is the worst nightmare of this country. He sees Nigerians as his Daura cows. Shame to all they gave him their vote.

Rick9:
Same here oh as an ART student a Philosopher, economic mumbo jumbo sounds like Greek to me

D thing be like A-level Jamb kweshions wey Prof Dibu personally use him hand arrange abi?

OkparaJesus:
In this life learn to be independent. Please don't trust anyone no matter how friendly the person might be.Human beings are very unreliable,even the best person you lay your trust can be the person that might hate you. No matter how friendly a person is pls dont lay down you trust in him/her. seriously this adage that goes like this "THE DEVIL U KNOW IS BETTER THAN THE ANGEL YOU DON'T KNOW". Is really true.

If you have a bad experience share it with us bro , we can all learn from it .

lanre316:
Wait a minute. Is this interest rates mandated on loans you get from banks or interest on your savings/deposits in banks.

its interest on cash deposited

wiseoneking:
Why and what do you want to hear from the so called economist explanation. No good, ok. Simple, govt may think they gained by this robbry act, but the poor masses and the low income earners would grow poorer. People cannot asses credits and loans due to the cost, and those that dare will end up in increasing the cost of the products they produce. Some advance countries has their as low as 4 or 5%. Buhari is the worst nightmare of this country. He sees Nigerians as his Daura cows. Shame to all they gave him their vote.

Bros, abeg u nor explain anything!
U only came to insult Sai Baba instead of doin d needful.
Shey u nah certified Wailer ni?

High CRR rate will discourage investors from borrowing from d banks and when they eventually do, cost of end products will go up, banks will begin to find means of making money thru oda means (hidden charges will come up) or lay off some of their staffs. Emefiele is clueless

GudluckIBB:
But it was ur phd holder GEJ that appointed him

The Zombies are already looking for ways to defend the illiterate certificateless presiDIOT. Dont worry we are waiting for your colleagues. When an IDIOT rules....

lanre316:
Wait a minute. Is this interest rates mandated on loans you get from banks or interest on your savings/deposits in banks.

Its both ways. Increase on deposits and increase on borrowings

Rick9:
Same here oh as an ART student a Philosopher, economic mumbo jumbo sounds like Greek to me

this is not a science or art matter, its a matter or national security, don't be limited by your discipline, broaden your horizon

All these Business news sef...
Sometimes be like maths.
Whatever that means I hope its for good.

There's still room for true confession @all who are claiming to understand this news.

Thanks for your response...I need a constructive response .... Not name calling and insulting people's Personalities

wiseoneking:
Why and what do you want to hear from the so called economist explanation. No good, ok. Simple, govt may think they gained by this robbry act, but the poor masses and the low income earners would grow poorer. People cannot asses credits and loans due to the cost, and those that dare will end up in increasing the cost of the products they produce. Some advance countries has their as low as 4 or 5%. Buhari is the worst nightmare of this country. He sees Nigerians as his Daura cows. Shame to all they gave him their vote.

Confused bank of Nigeria CBN, manned by confused governor with confused policies .




Brb

lanre316:
Wait a minute. Is this interest rates mandated on loans you get from banks or interest on your savings/deposits in banks.

Non. Both. It belongs to everybody but belongs to nobody.