Interest rate ’ll tame inflation - World Bank

Sola Fadare, Lagos - 18.07.2008

The Country Manager of the World Bank, Mr. Onno Ruhl, has said that the increase in the interest rate benchmark, also known as Monetary Policy Rate (MPR) by the Central Bank of Nigeria (CBN), will help in controlling inflation.

Ruhl said any time attempt was made to lower inflation, increase in the interest rate should be seen as an effective policy, saying raising the interest rate was a well known policy to dampen inflation”

The CBN had, last month and for the third time, increased interest rate to 10.25 per cent amid inflation fears. Increased liquidity with unfortunate rising food prices have charactised the economy in recent time, which have pushed the country’s inflation rate to 9.7 per cent in May from 8.2 per cent a month ealier, as Nigeria embarked on a $10 billion excess crude spending spree.

The Minister of Finance, Dr. Shamsudeen Usman recently said Nigeria would take “whatever action” necessary to keep the inflation rate below 10 per cent, an action Nigerians are still waiting for.