Higher MPR Raises Growth Concerns as Subsidy Fails to Keep Petrol Prices in Check

Further Rate Hikes Likely to Affect Real GDP Growth in 2023 as Economists Mull Unemployment Effects The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) responded to the surge in inflation, after it rose to 21.91% in February, a seventeen-and-a-half-year high, with yet another rate hike. The twelve-member committee decided on Thursday to raise the base lending rate by 50 basis points thus bringing it to 18%. Analysts say that while inflation at 21.91% is a genuine worry, the direct implication of a higher interest rate is slower growth. The IMF gave a 3.3% forecast for the Nigerian economy in 2023, Analysts say such projections would be downwardly reviewed especially if the hawkish tone of the CBN Governor is anything to go by. Private and corporate borrowing would cost more with the upward adjustment in interest rate. Consequently, businesses could downsize and reduce the scale of their operations as well as the rate at which they recruit with implications for the unemployment numbers. Overall, Analysts advise the CBN to address the more fundamental challenges responsible for the rising inflation which include: exchange rate scarcity, inefficient transportation system, and Insecurity