NNN: An economist, Professor Evans Osabuohien, said on Sunday that the increase in the benchmark interest rate from 11.5% to 13 by the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) would reduce funds loanable for investment.
Osabuohien, a senior lecturer in the Department of Economics at Covenant University, Ota, Ogun, made the observation in an interview with the News Agency of Nigeria on Sunday.
He noted that there was a need to control liquidity as the report from the apex bank indicated that there was a higher demand for foreign currency.
“The development resulted in a situation where the naira was falling against the dollar, which was not good for the economy.
“Furthermore, the MPC’s decision will reduce the demand for money and have a downward impact on the inflation rate in the country,” he said.
Osabuohien added that it will also affect loanable funds for short-term investment, adding that development will improve in the long term.
The economist advised the federal government to create an environment conducive to real sector prosperity, so that more goods can be supplied, thereby reducing the heavy reliance on foreign goods.
Osabuohien said the heavy reliance on imported goods had not helped the country in any way as the dollar would be used for the transaction of such imported goods at the expense of the naira.
NAN reports that the apex bank’s MPC, announced Tuesday in Abuja after the two-day meeting, the increase in the benchmark interest rate from 11.5 to 13 percent.