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Peter Obi Criticizes CBN’s Decision To Increase Interest Rate
Peter Obi Criticizes CBN’s Decision To Increase Interest Rate....KINDLY READ THE FULL STORY HERE▶
Peter Obi, the Labour Party’s presidential candidate in the previous general election, has denounced the recent move by the Monetary Policy Committee (MPC) to raise the Monetary Policy Rate (MPR) to 22.5% and the Cash Reserve Ratio (CRR) to 45%. He warned that such measures would worsen economic conditions and lead to increased job losses, particularly in sectors reliant on bank loans and credit facilities………CONTINUE READING
The Central Bank of Nigeria (CBN) announced the decision to raise the MPR by four hundred basis points to 22.75% from 18.75% after the first Monetary Policy Committee meeting for the year.
In a statement shared on Thursday via his social media handle, Obi argued that tightening liquidity in the financial system does not enhance productivity, especially in food production, which he identified as a significant contributor to inflation in Nigeria. He expressed concern that the measure would not effectively manage the money supply, as a significant portion of the money in circulation remains outside the banking system.
Obi highlighted the potential adverse effects of the rate hike on the economy, particularly on the real sector, manufacturing, and small and medium-sized enterprises (SMEs). He cautioned that the increased interest rates on loans, expected to exceed 30%, would strain the ability of businesses to repay, leading to a rise in bad loans and further deteriorating the nation’s economic situation.
Instead of focusing solely on monetary policy measures, Obi urged the government to address insecurity, which he identified as a crucial factor influencing food and crude oil production. He emphasized that improving security would boost overall production, making products more affordable and attracting foreign direct investments (FDIs) and foreign portfolio investments (FPIs) back to the country.
In conclusion, Obi emphasized the need for practical solutions to the economic challenges facing Nigeria, cautioning against relying solely on classical economic theories. He called for a holistic approach that addresses both monetary and security concerns to effectively revive the economy and restore investor confidence.
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