NBA-AGC 2017: How CBN is tackling inflation, exchange rate volatility – Emefiele

The negative impact of high inflation and exchange rate
volatility has prompted the Central Bank of Nigeria (CBN) to tackle
both developments head-on, its Governor, Godwin Emefiele, said on
Tuesday.

Speaking at the 2017 Annual General Conference of the Nigerian
Bar Association (NBA) in Lagos, the CBN governor said “high
inflation hinders economic growth and is not only harmful to growth
in the long run, it discourages saving and inhibits planning and
investment as people become more skeptical on the direction of
prices of goods and services.”

Emefiele, who spoke on the theme: “The Dilemma of Monetary
Policy During a Recession: Potential Options for Nigeria,” said
achieving low inflation is a major priority for the CBN, adding
that any decision the apex bank takes on the economy usually has
certain repercussions.

He said the naira depreciated from $1/N155 in June 2014 to as
high as over $1/N500 in the parallel market around February 2017,
adding that the country is also dealing with the perennial problem
of high interest rates in Nigeria.

“The naira exchange rate against the dollar has however improved
after the CBN introduced the Investors and Exporters FX Window.

“If we had chosen to reduce interest rates and increase money
supply, we would have further deepened the recession, while
assuring foreign investment outflows which would worsen foreign
exchange reserves situation,” he added.

The negative impact of high inflation and exchange rate
volatility has prompted the Central Bank of Nigeria (CBN) to tackle
both developments head-on, its Governor, Godwin Emefiele, said on
Tuesday.

Speaking at the 2017 Annual General Conference of the Nigerian
Bar Association (NBA) in Lagos, the CBN governor said “high
inflation hinders economic growth and is not only harmful to growth
in the long run, it discourages saving and inhibits planning and
investment as people become more skeptical on the direction of
prices of goods and services.”

Emefiele, who spoke on the theme: “The Dilemma of Monetary
Policy During a Recession: Potential Options for Nigeria,” said
achieving low inflation is a major priority for the CBN, adding
that any decision the apex bank takes on the economy usually has
certain repercussions.

He said the naira depreciated from $1/N155 in June 2014 to as
high as over $1/N500 in the parallel market around February 2017,
adding that the country is also dealing with the perennial problem
of high interest rates in Nigeria.

“The naira exchange rate against the dollar has however improved
after the CBN introduced the Investors and Exporters FX Window.

“If we had chosen to reduce interest rates and increase money
supply, we would have further deepened the recession, while
assuring foreign investment outflows which would worsen foreign
exchange reserves situation,” he added.