Former Director of Research Department, Central Bank of Nigeria (CBN), Dr Titus Okunronmu has predicted an increase in the lending rate from its current 24.75 by the Monetary Policy Committee (MPC) of Central Bank of Nigeria (CBN).
Okunronmu gave the prediction in an interview on Monday in Ota, Ogun.
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The financial expert spoke against the backdrop of the MPC meeting scheduled for Monday and Tuesday.
He stated that the rate would be raised by MPC, as CBN might not want to force it down, adding that until the inflation rate came down, the rate would continue to go up.
“It is at the same level of inflation that CBN will net or fix the lending rate,” he said.
According to the former CBN director, the higher the inflation rate, the less profit commercial banks will record.
Lending rate is the bank rate that usually meets the short- and medium-term financing needs of the private sector.
This rate is normally differentiated according to creditworthiness of borrowers and objectives of financing.
The difference is that the repo rate is the rate at which RBI lends to commercial banks by buying securities. Contrarily, the bank rate is the lending rate at which commercial banks borrow from RBI without securities.
Bank Rate is the rate or discount at which RBI grants loans or advances to commercial banks. Hence, it is also called Discount Rate
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