In a recent news posted on the CBN official Facebook page, the Central Bank of Nigeria's Monetary Policy Committee has increased the interest rate it sets (MPR) from 22.75% to 24.75% with a significant increase of 2%. Which means that getting loans from banks now will come with increased interest above what has been obtainable before now.
I know they might be trying to improve the economic situation of the country but loans have been one major help SMEs have strongly relied on to bring thier brilliant business ideas to light and most small businesses have complaimed that the curent interest rate is too much and seeing this increase, what's your take on this?
Nice topic but people didn't interact because they probably don't understand the terms and what language you are communicating about.
The primary reason why central bank do increase MPR rate is to reduce inflation. If you observe carefully you will understand that since this government assume the office, the country has not been stable, we have had so much inflation and what th central bank is trying to do is to remove excess money from circulation and removing excess money reduce inflation theoretically. So increasing MPR is discouraging borrowing from business companies and cooperation.
The central bank increases the value so that commercial banks wouldn't have enough money to give out, when you increase rate of interest to business people, they would be discourage to borrow and we will have less money in circulation but this is temporary, they can reduce it when they have achieved their goal.