The Central Bank of Nigeria (CBN) Governor Godwin Emefiele has announced an increase of the benchmark monetary policy rate from 12% to 14% the highest level since the CBN introduced the rate in December 2006.
Nairametrics Publisher, Ugodre had on CNBN Africa earlier Tuesday forecasted a 100-200 basis point increase (1-2%) as he opined that the Central bank was raising rates to attract foreign investors. We believe the fact that inflation rate is about 16.5% means the CBN is now left with a rate that provides a negative yield which will deter foreign portfolio investments.
A higher MPR means foreign investors can fly to the safety of a 14% interest rate to hedge against Nigeria’s galloping inflation rate and depreciation of the naira.
More to follow…
The post above and its ensuing comments, if any, is purely the opinion of the writer(s). It therefore should never be considered as an investment advise of any sort. If required, readers should please consult a competent professional financial adviser for any investment decision.