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 Nation