Nigeria has just hiked interest rates: why it's the wrong recipe for curbing inflation

The Central Bank of Nigeria recently announced an increase in the interest rate, from 11.5% to 13%, a 1.5 percentage point hike that took effect immediately.

Whenever the Central Bank changes the monetary policy rate, otherwise known as the discount or interest rate, deposit and other financial institutions follow suit. Banks will therefore be raising their lending rates, which will increase the cost of borrowing and reduce the demand for…

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