A member of the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) Adeola Adenikinju, says Nigeria’s inflation rate is projected to remain above 17.9% in 2021.
Adenikinju in a note on Tuesday said Nigeria has one of the highest inflation rates in the world, according to Bank staff projection data which is fueling inflation expectation by economic agents.
“High inflation induces macroeconomic instability. It will negatively affect the welfare of households and fixed income earners.” He said in his note
Adenikinju also said the Central Bank of Nigeria has resisted being aggressive with strict price stability because of the slow economic growth, high number of unemployment and rising poverty within the country.
Although, Nigeria exited in the fourth quarter by a weak recovery rate of 0.11 percent. With this in mind Adenikinju said the monetary policy committee can’t be aggressive with its approach to grow the economy.
“The weak economic growth, rising unemployment and poverty also mean that we cannot aggressively pursue strict price stability at a time we are slowly crawling out of recession.” the economist said.
Adenikinju also stated that “I see the CBN intervention credit as complementary and not substitution to credit from the deposit money banks. Also given the focus of capital expenditure of the government this year, it then means that we can focus on growth and tackle inflation at the same time.”
In his note in the MPC communique, he said the current economic state will negatively impact fixed income earners and welfare of households within the country, as high inflation causes macroeconomic instability.
“This is also fueling inflation expectations by economic agents. Nigeria has one of the highest inflation rates in the world. High inflation induces macroeconomic instability. It will negatively affect the welfare of households and fixed income earners.” He said in his note