Europe's financial crises warranted MPR hike ' Analysts

The current financial crisis in some European nations have been described as one major factor that warranted the persistent increase in Nigerias Monetary Policy Rate by the Central Bank of Nigeria.With Greece being the worst hit, in terms of debt profile in the continent, analysts who spoke with our correspondent on Monday noted that the Nigerian economy was directly or indirectly impacted by the EU crises.They explained that during crises, Western economies were always known to protect their interest by all means, hence, reducing lending to countries in other continents, a development which might trigger inflation in developing economies like Nigeria."The ongoing financial crises will affect international borrowing and in turn our economy. The amount, the tenor and the interest rates we pay will all be adversely impacted," the Managing Director and Chief Executive Officer, Universal Anchor Limited, a research, consulting and training firm, Mr. Sesan Awoniki, said.He noted that the CBN was being cautious by increasing the benchmark interest rate, stressing that though the development had a negative impact on the manufacturing sector of the economy, the overall benefit to Nigeria was most vital.The Monetary Policy Committee of the apex bank, in an emergency meeting on October 10, had raised the benchmark interest rate by 275 basis points to 12 per cent from 9.25 per cent, making it the sixth time which the committee had hiked MPR since the beginning of the year."These foreign economic conditions could also have a crippling effect on extensive national health issues, mainly the ones which contain partnerships of some sort," Awonoiki said."The amount of support initially pledged is in most cases scaled down and ultimately has an effect on the local economy."The former Acting Head, Economics Department, University of Lagos, who currently is a Research Professor and Economist, Prof. Kayode Familoni, said."The EU financial crisis has a major impact on Nigeria today in the ever increasing interest rates by the CBN. This may not be welcomed by some sectors at the moment, but we hope it pays our growing economy," he added.
Click here to read full news..