The governor, Mr. Godwin Emefiele of CBN says they will pursue expansion policies to fight recession.
CBN says they will pursue expansion policies to fight recession in the country as confirmed in a new Statement released today
Mr. Godwin Emefiele said the expansion was necessary in order to handle the rising inflation and curb recession in the country.
“The committee was therefore of the view that to abate the pressure, it had no choice but to pursue an expansionary monetary policy using development finance policy tools, targeted at raising output and aggregate supply to moderate the rate of inflation.
“At present, fiscal policy is constrained and so cannot, on its own, lift the economy out of contraction or recession, given the paucity of funds arising from weak revenue base, current low crude oil prices, lack of fiscal buffers and high burden of debt services.
“Therefore, monetary policy must continue to provide massive support through its development finance activities to achieve growth in the Nigerian economy.”
He said that the Monetary Policy Committee, MPC, was confronted with what policy direction to focus on, even though it’s primary mandate was price and monetary stability.
He also said that the second quarter contraction of the year may lead to a recession if the 3rd quarter output showed a further contraction.
Mr. Godwin Emefiele, governor of the CBN said this was because with the recent removal of subsidy on fuel price, the increase in energy prices, and the adjustment of the exchange rate, inflationary pressure would continue.
He said the CBN was asked by the MPC to continue to provide funding to sectors that would resolve the supply constraints in petrol pricing, energy pricing and also ensure food availability.
He said that since the currency adjustment was a causal factor in determining the price of petroleum and energy, the Monetary Policy Committee believed that the CBN management must take actions to make the exchange rate stabilised.
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