World Bank Group President David Malpass has warned central banks around the world to stop pumping money into government spending.
In a Twitter space hosted by The New York Times today, July 20, 2022, Malpass explained that central banks should be more concerned with addressing supply chain issues.
The head of the World Bank, in the spaces on “Why food prices continue to rise and what this means for world hunger”, said central banks should transfer funds from capitalized sectors to cushion shocks resulting from food shortages.
He said: “I have argued, and I think it is very important, that when central banks raise the interest rate they will also use other tools to fight inflation. And that means allowing capital to flow into supply chains.
“This is currently blocked because central banks are directing much of their capital to overcapitalized sectors of the global economy, which is mainly governments. A lot of money in the world goes to government, and it’s not the most productive use.
He noted that it was becoming increasingly difficult for poor countries to take care of their own people, placing the responsibility on advanced economies to meet the challenge of expanding production for the world.
In a virtual conversation monitored by CIRI on YouTube on May 26, 2022, Malpass warned of a global recession amid the Russian-Ukrainian war that threatened food and energy.
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He also called on developing countries to stop subsidizing energy, and instead create safety nets so their citizens can prosper.
Recently, the World Bank listed Nigeria among the top 10 countries in the world with the worst inflation rate, based on 2021 figures. Nigeria ranked 8th on the list with an annual inflation rate of 16.95%, a list dominated by countries like Sudan, Lebanon and Zimbabwe.
A ICIR The report had hinted that the cost of funds for loans in the Nigerian banking sector could increase since the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) raised the interest rate to 14%.
CBN Governor Godwin Emefiele told the meeting that the committee would continue to raise the benchmark rate if it tamed rising inflation concerns.
Notably, the MPC raised the official interest rate by 100 basis points (bpts), bringing the total increase to 250bpts in three months.
The committee had raised the monetary interest rate (MPR) by 150 basis points in May 2022, from 11.5% to 13%.
Similarly, the inflation figure in Nigeria jumped to 18.60% in June from 17.71% in May, on an annual basis.
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