Di Central Bank of Nigeria (CBN) don raise di Monetary Policy Rate (MPR) again, from 16.6% to 17.5% in order to control inflation.
Monetary Policy Rate na wetin banks dey take to measure interest rate.
Di CBN Govnor, Godwin Emefiele announce di increase of di new MPR afta di top bank Monetary Policy Committee meeting on Tuesday.
CBN say di purpose of di increase in interest rates na so dem go fit control di high inflation wey di kontri dey face.
But wetin dis new increase in interest rates mean for di ordinary Nigerian man for street?
Meaning of di 17.5% rate increase
Di 17.5% benchmark rate increase of di MPR mean say interest rates too don increase be dat.
E mean say anybody wey don borrow money from bank or wey dey plan borrow money from bank – weda na individual o, small business abi big company o – all of una go pay higher interest rate.
Dr Muda Yusuf na di Director, Centre for di Promotion of Private Enterprises (CPPE) and financial analyst, say wit di recent CBN announcement, banks go begin review di interest rates of all di pipo and businesses wey bin dey owe dem money.
But e get one group of pipo wey dis policy no go affect.
Oga Yusuf say all di pipo wey dey under CBN Intervention Fund no go dey affected by di interest rate increase.
Implication
Dis new increase get implications not just for di pipo and businesses wey dey owe banks money, but also for everyday pipo.
For business dem wey dey owe banks money, once banks apply di new rates, di production and operating costs go go up.
“Banks go review dia interest rates wit many of dia customers wey dey owe dem money. So if interest rates dey rise, of course e get implications for cost,” Yusuf tok.
“Also e get implications for operating costs and depending on di kain product wey di business dey produce, e go get implication for prices of di products, becos some of dem go gatz to transfer di cost, additional costs to dia customers.”
Who di new rates go benefit
High interest rates no be good tin at all for pipo wey dey borrow money from banks, but e get pipo wey e dey good for.
If you get fixed deposit account wit bank dis rate increase fit to benefit you.
How, you ask? Oga Yusuf say: “Di yields of some of dis deposits fit also increase, for example, treasury bills and bonds, dem too dey pick dia rate from di benchmark rate as well.”
Anoda set of pipo wey go fit to benefit from di increase na pensioners.
Di reason na sake of say pension funds dey usually invest plenty money into some of dis financial instruments.
Diafore, Yusuf say, if di interest rates dey go up, e go also affect dis instruments too and by extension di pensioners.
High rates to control inflation
Dis no be di first time di CBN dey increase interest rates in recent times.
Wit di current economic situation for Nigeria, di kontri don dey witness increasing high rate of inflation.
Di increasing high rate make di top Nigeria bank hike rate to 16.5% for November 2022.
Before dis time, CBN increase MPR from 11.5% to 15,5% earlier for 2022.
For December, di National Bureau of Statistics say Nigeria inflation drop to 21.34% from 21.47% for November 2022.
But CBN govnor Godwin Emefiele say even though di inflation don dey reduce, e no dey enough for di kontri to celebrate.
