Nigeria’s Central Bank governor, Godwin Emefiele, on Sunday signalled the possibility that the apex bank could begin to ease monetary policy soon, eventhough inflation pressures still remains a concern.
Emefiele said he expects inflation easing to single digits in 2018 and at worst, lower double digits.
Nigeria’s inflation eased to 13.34 percent in March 2018 – the fourteenth consecutive deceleration since January 2017, raising the hope that the numbers closely watched by the apex bank could ease within the 6-9 percent target range by year end.
Briefing the Nigerian media on the outcomes of week-long spring meetings of the International Monetary Fund (IMF) and World Bank in Washington DC, Emefiele said inflation concerns were gradually ebbing due to the apex bank’s monetary policy stance.
“At this time, yes, we are still in the mode of tightening, and indeed even the IMF reported that our position to tighten was the right one at this time when we are working very hard to rein in on inflation.
“But I can assure all of us, like I said before and let it be on record, if you wish, that we will not tighten in perpetually, that at some point, we will begin to loosen and I believe that those financial accommodation period are coming on very, very soon,” Emefiele stated.
The IMF had commended what it called the CBN’s tightening bias” in 2017, and expects such stance to be sustained until inflation abates to the single digit target range. The CBN left benchmark rates unchanged for the ninth straight time, citing inflation concerns.
“We are hoping that in 2018, we should achieve very low double digit and if we are lucky, high single digit for 2018,” Emefiele, who co-briefed the press with the finance minister, Kemi Adeosun stressed.
“We would love as much as possible to have our inflation as low as possible, last month inflation was at 13.3 percent,” he added.
The IMF sees inflation levels for Nigeria and Angola, Africa’s two key large economies remain in double digits, eventhough commodity prices in the region could ebb slightly in 2018 through 2019.
According to the fund, the uptick in inflation expectations for the two countries would reflect the pass-through effects of currency depreciation for Angola and supply factors, and assumed monetary policy accommodation to support fiscal policy for Nigeria.
On the importance of the reesve, the advice that was given wasthat there is the need tosave for the raining day. We need to continue to build the resevres, so the decsions to rebuild the resevres from anbout $26 billion in 2016 to almost $48billion today is a decision in the right direction.
We are goi8ng to buld the resrves, because if we had resevres wnhen we were hit by the exogenous shocks, we will not nsuffer the recession that we suffered, it would have been possible for us to defend ur postions, and there is a very strong likelihood that there could also be reversals.
The minister of finance talked about the US fed normalisation, interest rate would go up, and when this happens, the emerging and frontier markets will loose those monies that came in, so when there is a reversal, we need to prepare ourselves, that when this happens, we should be abloe to withstand the shockn so that we don’t we are caught in problems again.
Onyinye Nwachukwu, Washington DC
