Obaseki: Interest rate increase won’t support economic growth

Edo State Governor, Godwin Obaseki, has condemned the decision of the Central Bank of Nigeria (CBN) to increase the Monetary Policy Rate (MPR), also known as the benchmark interest rate, to 22.75 per cent.

The Star had, on February 27, 2024, reported that the Monetary Policy Committee (MPC) of the CBN increased the MPR by 400 basis points from 18.75 per cent to 22.75 per cent.

Speaking at the annual Edo Zone Bankers’ Committee Dinner in Benin, the Edo State capital, on Monday, March 4, 2024, Obaseki cited the potential adverse effect of the interest rate increase by the CBN on businesses and the nation’s economy, saying the development would not lead to economic growth.

The governor said: “The next few months will be difficult because the policies rolled out by CBN will unfortunately not support growth in our economy. The interest rate is already high and jacking it up will not allow small businesses access to credit to make them grow.

“We must focus on the fundamentals which is increasing production, making sure our citizens produce what we consume and depend less on imports. Our economic and monetary policies should not be determined by exchange rate alone.

Obi: Interest rate increase’ll worsen economic hardship, job losses

“The issue of increasing the cash reserves in a bid to tighten liquidity is going to be detrimental to our economy. We should focus on fiscal issues to enable us to grow our economy, not panic about the interest rate. Creating jobs should be a priority for us as a nation.”

Commending the role of commercial banks in societal development, Obaseki tasked the banks to come up with products and services which can assist the majority of citizens in overcoming the harsh economic realities experienced nationwide.

He however reassured that his government will continue to partner with the financial sector to cushion the effects of the present economic realities on the people of the State.

Noting that his government has over the last seven and half years undertaken several policies and programmes to reposition Edo State as a leading subnational in terms of GDP growth, the governor reaffirmed his government’s commitment to the welfare of the people.

The Star