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[ MAIN ]BANKING & FINANCENEWS

Analysts Warn Of Higher Interest Rates In Commercial Banks’ Loans

Financial market analysts have warned of the looming increase in interest rates of  commercial banks in Nigeria.

These analysts have stated that if banks are required to make provisions on their 2014 accounts for their loan exposures to the upstream oil and gas sector of the economy, credit creation may be hindered and cause inter-bank rates to leap and subsequently affect fixed deposit rates.

Analysts at FSDH Research, in a recent report, also warned of upward pressure on domestic interest rates if the federal government budget deficit remains high.

According to them, massive deficit implies that the government would borrow from the domestic sources to partly fund the deficit, which will in turn put pressure on interest rates.

The analysts said in part: “We expect the MPC of the CBN to maintain the Monetary Policy Rate (MPR) at the current level of 13 per cent. Our inflation rate forecast is within a single digit range in 2015. This means that the nominal interest rate in the lower double digits will produce positive real yields and will be attractive to the fund managers.”

In addition they reeled out other issues that will drive interest rates in 2015, to include: the monetary policy stance of the Monetary Policy Committee (MPC) and inflation rate expectations.

 

 

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