Omodele Adigun
Those waiting for the Central Bank of Nigeria (CBN), to decree single digit interest rate regime may have to wait longer as its governor, Godwin Emefiele, at the weekend declared that doing so now would be counter- productive to the economy.
Emefiele also took a swipe at those angling for the free float of the Naira, dubbing them as ignoramuses.
The CBN boss who spoke during a Roundtable Session on Developing a Roadmap for Greater Growth and Job Creation in Nigeria at the weekend in Lagos, said the apex bank was caught in a dilemma of policy making in Nigeria, stressing “in an environment where inflation recently was as high as 18.72 percent, it would be counter- productive to reduce interest rates because any attempt to ease interest rates under a high inflationary environment will no doubt retard growth”.
As for those who demanded that the CBN should stop defending the Naira and allow market forces to determine the exchange rate, he said they are calling for the Naira to be floated because they have shockingly limited or outrightly incorrect information.
His words: “Typically, for a nation to be seen to prosperous, any citizen of that country will expect the following macro economic indices to prevail : A low interest rate regime, a stable exchange rate regime and robust reserve position , a low inflationary environment, and lastly, an environment of full employment. In fact , I love these and would have less stress in monetary policy if all these are possible. But the question we should ask ourselves at this session is, in the Nigeria of today, are these all possible at the same time?
“I have also heard a lot of people suggest that all they want is for the CBN to reduce interest rates. In fact, for us at the CBN, achieving a low interest rate regime will give us a great sense of accomplishment. Indeed, given our determination to stimulate economic growth, it is obvious that we would want to pursue a policy of moderating interest rates. Yet, in an environment where inflation recently was as high as 18.72 percent, it would be counter- productive to reduce interest rates because any attempt to ease interest rates under a high inflationary environment will no doubt retard growth.