Monetary tightening occurs when a central bank raises interest rates and deposit ratios to make credit difficult to access in a bid to reduce spending and cut commodity prices.The monetary policy committee at its last meeting on March 26, raised the monetary policy rate , which benchmarks interest rates, from
“With the real sector already burdened by high borrowing costs and inflation, the CBN’s decision could further shrink the sector by disincentivising investments. On the cash reserve ratio , the firm said the elevated rate would further restrict the ability of banks to channel credit to support the economy’s ambitious growth drive.
“Meanwhile, with the onset of base effect expected after mid-year, the next few months will be important for assessing the impact of the CBN’s monetary tightening on inflation,” KPMG said.
Source: Financial Digest (financialdigest.net)
Bank Of Nigeria Credit Economy Monetary Tightening Interest Rates Inflation Growth
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