Nairametrics
  • Home
  • Exclusives
    • Financial Analysis
    • Corporate Stories
    • Interviews
    • Investigations
    • Metrics
  • Markets
    • Currencies
    • Cryptos
    • Commodities
    • Equities
      • Dividends
      • Stock Market
    • Fixed Income
    • Market Views
    • Securities
  • Industries
    • Company News
    • Consumer Goods
    • Corporate Updates
    • Corporate deals
    • Corporate Press Releases
    • Energy
    • Entertainment
    • Financial Services
    • Hospitality & Travel
    • Manufacturing
    • Real Estate and Construction
    • Tech News
  • Economy
    • Nairalytics
    • Macro-Economic News
    • Research Analysis
    • Budget
    • Public Debt
  • Business News
  • Financial Literacy
    • Career tips
    • Personal Finance
  • Lifestyle
    • Billionaire Watch
    • Profiles
  • Opinions
    • Blurb
    • Op-Eds
  • 2023 Elections
No Result
View All Result
  • Home
  • Exclusives
    • Financial Analysis
    • Corporate Stories
    • Interviews
    • Investigations
    • Metrics
  • Markets
    • Currencies
    • Cryptos
    • Commodities
    • Equities
      • Dividends
      • Stock Market
    • Fixed Income
    • Market Views
    • Securities
  • Industries
    • Company News
    • Consumer Goods
    • Corporate Updates
    • Corporate deals
    • Corporate Press Releases
    • Energy
    • Entertainment
    • Financial Services
    • Hospitality & Travel
    • Manufacturing
    • Real Estate and Construction
    • Tech News
  • Economy
    • Nairalytics
    • Macro-Economic News
    • Research Analysis
    • Budget
    • Public Debt
  • Business News
  • Financial Literacy
    • Career tips
    • Personal Finance
  • Lifestyle
    • Billionaire Watch
    • Profiles
  • Opinions
    • Blurb
    • Op-Eds
  • 2023 Elections
No Result
View All Result
Nairametrics
No Result
View All Result
Home Economy Macro-Economic News GDP

What does CBN’s new Interest rate hike mean for the Nigerian economy?

Ubah Jeremiah IfeanyibyUbah Jeremiah Ifeanyi
10 months ago
in GDP, Macro-Economic News
Why Emefiele’s interest rate policy is ‘great’
Share on FacebookShare on TwitterShare on Linkedin

On Tuesday 24th May 2022, Nigeria’s Central Bank suddenly hiked its benchmark interest rate for the first time in nearly six years to 13% from 11.5% (a 150bps hike).

Governor Godwin Emefiele announced that the monetary policy committee’s decision was intended to slow galloping inflation and save the persistent Naira depreciation.

This change in CBN’s stance to a hawkish attitude is an attempt to lessen inflationary pressures and may potentially slow the rate of currency depreciation.

On the flip side, higher interest rates pose a variety of financial risks such as a potential slow down of GDP growth, a rise in borrowing costs, a decline in disposable income for borrowers, and a risk of slowing spending for credit-dependent consumers.

However, across the globe, central banks have been adjusting interest rates to fight rising costs of living, thus the CBN is not alone. Even in Africa the Ghanaian and South African central banks recently adjusted benchmark rates also.

What you should know

  • For borrowers, rising rates simply signal the end of accommodative monetary policies and thus interest payments on loans become more expensive when interest rates rise. As a result, people are discouraged from borrowing to spending. Therefore borrowers may want to seek to reduce total borrowing and reduce leverage if possible. This includes corporations and individuals alike.
  • For savers and investors, rising interest rates are always welcome as the returns on savings and investments should start to trend upwards to match inflation. This is a long-overdue scenario given the upward trajectory of inflation in Nigeria.
  • From a macroeconomic perspective, it remains to be seen what impact this will have on GDP growth, especially as recent prints suggest anaemic growth rates of between 3% to 4%. The apex bank governor acknowledged this risk to Nigeria’s GDP growth in his press conference…..
  • Emefiele said, “While it may seem contradictory to raise rates in the face of fragile growth, it is a dilemma that most central banks around the world today are grappling with at this time. On balance, it is quite clear and compelling that attacking inflation is more urgent in the sequence of policy objectives in this regard.”
  • Finally, from a monetary policy perspective, analysts opined that with this increase in interest rates, the CBN is attempting to boost the attraction of Nigerian assets to overseas investors to stimulate capital inflows and sustain the Naira. Higher interest rates boost the value of a currency, owing to hot money flows.

Related

Tags: CBN MPC MeetingInterest rate hikeMr Godwin Emefiele

Comments 2

  1. Odijie Ogbemudia Joseph says:
    May 24, 2022 at 6:58 pm

    Increasing interest rate is that the way to an economic upliftment the same nairametric posted naira lost over 70% in emefiele regime so poor and sign of no equivalence experience rather a corruption in perfection

    Reply
  2. Collins says:
    May 25, 2022 at 5:58 am

    I was actually gunning for a downward review because we are not even spending in Nigeria, the money have never been there. The bad side is that Nigeria is a country too dependent so what affects top nations around the world also affects our economy here. Reduction to me would have stimulated the docile economy,

    Reply

Leave a Reply Cancel reply

Press one
hfm
Mega Millions
fidelity banner
SME
HFM
Patricia





NM newsletters

Business News | Stock Market | Money Market | Cryptos | Financial Literacy | SME |

Recent News

  • FBN Holdings explains why 2022 results was not released on March 31st
  • Buhari approves July 28 as new date for conclusion of deep offshore oil block mini-bid round activities
  • Fears of a global recession could mean lower oil revenues for Nigeria

Follow us on social media:

Recent News

fbn-holdings-profit-jumps-by-123-to-n91-billion-in-q3-2022

FBN Holdings explains why 2022 results was not released on March 31st

April 1, 2023
Buhari approves July 28 as new date for conclusion of deep offshore oil block mini-bid round activities

Buhari approves July 28 as new date for conclusion of deep offshore oil block mini-bid round activities

April 1, 2023
  • Download Nairametrics iOS App
  • Download Nairametrics Android App
  • Home
  • Exclusives
  • Markets
  • Industries
  • Economy
  • Business News
  • Financial Literacy
  • Opinions

© 2023 Nairametrics

No Result
View All Result
  • Home
  • Exclusives
    • Financial Analysis
    • Corporate Stories
    • Interviews
    • Investigations
    • Metrics
  • Markets
    • Currencies
    • Cryptos
    • Commodities
    • Equities
      • Dividends
      • Stock Market
    • Fixed Income
    • Market Views
    • Securities
  • Industries
    • Company News
    • Consumer Goods
    • Corporate Updates
    • Corporate deals
    • Corporate Press Releases
    • Energy
    • Entertainment
    • Financial Services
    • Hospitality & Travel
    • Manufacturing
    • Real Estate and Construction
    • Tech News
  • Economy
    • Nairalytics
    • Macro-Economic News
    • Research Analysis
    • Budget
    • Public Debt
  • Business News
  • Financial Literacy
    • Career tips
    • Personal Finance
  • Lifestyle
    • Billionaire Watch
    • Profiles
  • Opinions
    • Blurb
    • Op-Eds
  • 2023 Elections

© 2023 Nairametrics

error: Alert: Content selection is disabled!!