The Monetary Policy Rate (MPR) increase by the Central Bank of Nigeria will not lead to reduction in inflation rate as projected by the CBN.
World Bank stated this in its latest report titled, “Risks to Nigeria’s growth outlook are substantial, including the possibility that the tightening of monetary policy stops short of reining in inflation.”
CBN also addressed this in its global economic prospects report released on Wednesday.
The Monetary policy rate increased by 750 basis point from 22.75 percent to 26.25 percent in May 2024.
Analyst argued that the increase in interest rate will discourage manufacturers, contractors and others to apply and repay their loan which will lead to low productivity and job losses.
World bank report also predicted Nigeria’s economic growth rate outlook for the rest of 2024 and 2025 to remain the same. “Growth in Nigeria is projected to pick up to 3.3 per cent this year and 3.5 per cent in 2025.”
“After the macroeconomic reforms’ initial shock, economic conditions are expected to gradually improve, resulting in sustained, but still-modest growth in the non-oil economy.”
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