Inflation is already out of control, reaching a 17-year high in August of 20. 52 percent, stifling the parallel market currency rate to N720 to $1, escalating the food crisis, and speeding up the food basket index (food inflation) to 23.12 percent, among other macroeconomic risks.
The CBN further increased the interest rate by 150 basis points to 15. 5 percent at its just finished two-day Monetary Policy Committee (MPC) meeting.
Since May, the top bank has raised interest rates three times in a row in an effort to control inflation. After comparing the current inflation rate of 20. 52 percent with the 14 percent target rate, the decision to increase the monetary policy rate (MPR) was made; this is to reduce the negative real interest rate gap and control inflation.
Kazeem Bello, CEO/Principal Partner of Afrique Capital and Equity Funds Limited, criticized the CBN’s use of interest rate hikes to combat inflation from the moment the apex bank began to do so. “the CBN had only been successful in addressing the nation’s increasing inflation by “copying and pasting” strategies from other nations; labeling it nothing more than a “policy somersault.” This is according to Kazeem.