In the wake of Nigeria’s rising inflation, economists have said that interest rates may hit an all-time high.
Earlier reports showed Nigeria’s inflation rate rose by 20.52 per cent in the month of August 2022, the highest since September 2005. There are speculations that the new figure might trigger an increased interest rate.
Interest rates and inflation often follow the same direction, according to economists.
Speaking in an exclusive interview with The PUNCH, Senior lecturer and economist at Pan Atlantic University, Olusegun Vincent, said that although the Central Bank of Nigeria had been reluctant in raising rates, it was becoming almost inevitable.
“You will notice that CBN has always been reluctant to jack up the monetary policy rate, which is a reflection of our interest rate in the economy, currently 14 per cent. And we see inflation at 20.52 per cent. Also, don’t forget that the food inflation is about 23 per cent. Despite all these, I believe the current figures don’t reflect the general increase of commodities in the market.”
Vincent explained that in order to combat the rising inflation, putting the interest rate on par was always the first course of action to create a balance.