The Director, Monetary Policy Department of Central Bank Of Nigeria, Moses Tule, on Wednesday said reducing monetary policy rate other wise known as “interest rate” will not in any way take Nigeria’s economy out of recession.
Tule , speaking on ChannelsTV Sunrise Daily monitored by Nigerian Current said to spend our way out of recession as sounded by some experts is not the only way out as country is also in stagflation.
Going down memory lane, he said despite the interest rate reduction in the past, the CBN has not seen “that response, in terms of growth in credit”.
“we are not just in recession but we are in a stagflation, where growth has reduced precipitously to the negative and you have prices rising, so it is insufficient for the Monetary Policy Committee to just meet and say we are reducing interest rates to address a complex economic situation like stagflation”.
To get out of the economic quagmire Nigeria is in, Mr Tule said the “monetary policy, fiscal policy, trade policy, budget policy need to sit together in a retreat to fashion out comprehensively what the policy response is going to be.
“All the key policy parameters must be brought to the table to fashion out what the way forward is for the country”, he said, insisting that “you can’t clap with one hand”.
Mr Tule added that with the inflation rate at 18 per cent, a reduction in interest rate will lead to an increase in money supply which in turn means higher inflation, wondering “if the government has the resources to increase salaries when there is higher inflation.
“The current inflationary trend are not strictly monetary policy induced factors. Some are legacy factors that rose as a result of reforms, like in electricity tariff, petroleum pricing model and foreign exchange market”, he maintained.