04 October 2016, Abuja – The Central Bank of Nigeria will pursue price stability as an anchor for economic growth and attract foreign investors as the country battles economic recession and rising inflation, the CBN Governor, Mr. Godwin Emefiele, has said.
“The central bank does not reckon that curbing inflation, attracting foreign investors and supporting growth are mutually exclusive objectives,” Emefiele told The Banker magazine, according to Reuters.
He added, “The bank will continue to ensure that its decisions do not only consider price and financial system stability, but also issues of employment and growth.”
The CBN’s Monetary Policy Committee had in September left the benchmark interest rate at 14 per cent, resisting calls from the fiscal authority to lower borrowing costs to help the Federal Government borrow more domestically without increasing its debt servicing costs.
The CBN has said it will keep interest rates tight to attract foreign currency and resolve a chronic dollar shortage, occasioned by the slump in crude oil prices.
The central bank had said policymakers will need to act on fiscal, monetary and trade policies to jump-start growth, and that interest rate cuts alone will not help pull the economy out of the current recession.
Shortly after the last MPC meeting, Emefiele told reporters that rate cuts had not spurred credit growth as the banking system did not respond to the move.
Rising inflation, which hit more than an 11-year high of 17.6 per cent in August, was not due to excess money supply but was the result of government policies that included a hike in electricity tariffs and fuel prices and a currency floatation, which made the naira to fall by 30 per cent in one day.
The National Economic Council has urged the CBN to introduce “special monetary policy dictated by consumer price and exchange rate.”
Emefiele said he was optimistic about the economy despite the headwinds.
The Federal Government has tripled its spending on infrastructure in this year’s budget while widening the tax base to generate income.