By Babajide Komolafe & Adeola Badru
The Governor, Central Bank of Nigeria, CBN, Mr Godwin Emefiele, yesterday said that the apex bank will sustain its use of unconventional monetary policy to boost economic growth and enhance price stability.
Meanwhile, Emefiele dismissed claims that the country has multiple exchange rates, saying that what Nigeria has is multiple foreign exchange windows, as exchange rates have since converged around N360 per dollar.
The CBN Governor spoke in Ibadan while delivering a lecture titled, “Up Against the Tide: Nigeria’s Heterodox Monetary Policy and the Bretton Woods Consensus”, at the Distinguished Leadership Lecture Series of the University of Ibadan, Oyo state.
Emefiele noted that there has been global shift towards unconventional policy tools, since the global financial crisis of 2008, which exposed the weakness of conventional monetary tools in tacking macroeconomic challenges.
Stressing that this prompted the CBN and federal government to also adopt combination of unconventional monetary and fiscal policy measures, which helped to lift the country out of recession in 2017, he said: “The favourable outcomes and strengthening outlook of the Nigerian economy is traceable to the timeous adoption on non-traditional policy methods. The CBN has been able to reduce inflation, build our foreign exchange (FX) reserves, maintained FX market stability, and foster real growth.”
Noting that the adoption of unconventional monetary policy by the CBN was also necessitated by its developmental mandate, he dismissed criticism of the methods, saying: “Regardless of these scathing views and critiques, the fact remains these unorthodox policies were well conceived, and has been yielding significant gains for the Nigerian economy”.
While acknowledging the challenges and complexities of adopting unconventional policy tools, he averred that, “the cost-benefit analysis of undertaking unconventional monetary policies indicate that the societal gains of such policies outstrip whatever challenges that may subsist. The experience since the global financial crises show that growth consideration cannot be sacrificed over the long-term for an exclusive focus on price stability, because unabated real contractions (and the associated persistent negative output gaps) can only lead to declining potential output, an outcome which is entirely dangerous for any economy given the structural fall in its long-run growth trajectory”.
Reiterating the commitment of the apex bank to the continue use unconventional policy measures in order to achieve its price stability and developmental mandates, Emefiele , who was recently appointed for a second term in office as CBN Governor said: “Much of the success we see today is due to the adoption of heterodox macroeconomic policies. Within the CBN, our unconventional methods, especially in the management of the FX market and our development financing, supported by the orthodox approaches, in the form of our timely adjustments of monetary policy rate, have been able to optimally balance the delicate objectives of price stability and real output growth.
“We will continue to develop policy instruments and device ways of ensuring that an optimal mix of heterodox policies is continually deployed to engender the overall wellbeing and prosperity of the Nigerian economy. Our overall aim remains the concurrent attainment of price stability, real growth, full employment, and poverty reduction.”