A new twist has been added to the face-off between the CBN Governor, Godwin Emefiele and the Minister of Finance, Kemi Adeosun, on how interest rate and inflation rates can be used to fight Nigeria’s recession.
Both officials were in disagreement over the issue, prompting the intervention of the Vice President, Yemi Osinbajo. The matter has however taken a new twist.
Indications to this effect emerged over the weekend when Adeosun insisted that there won’t be any likely shift in position from the anticipated end of the year meeting of the CBN Monetary Policy Committee (MPC).
The MPC is expected to deliberate on the new jump inflation from 17.5 percent in September to 18.3 per cent in October 2016.
Officials of the Finance Ministry said the trend is a negation to government’s drive aimed at restoring confidence of the populace in policies to achieve earlier reversal of the recession ravaging the economy.
It was gathered that the MPC would not review the interest rate downwards because of the sustained rise in inflation in its 9th month running and that it has not gone down well with the Minister, who had continued to maintain that high interest rate is stalling investment in Nigeria.
Also, Emefiele while speaking at a public function in Lagos over the weekend, admitted that high interest rates negate any growing economy, but there is noting the apex bank could do given the inflation that is trending at 18.3 per cent.
Observers said the stance of the CBN boss is likely to send the wrong signals to potential investors, who are said to be waiting in the wings to know how to deploy their money in Nigeria.
Said Mr. Matthias Ukoh, an investment consultant: “Nothing has shown that the CBN is working in tandem with the rest of policy makers in this administration, if such comment is coming from it.
“There is no country where interest and inflation rates are allowed to take such a flight without the small and medium sized firms paying dare price.
“Recession is fought by encouraging investments. But here in Nigeria, dollar is scarce because foreign investors have withdrawn from the country and the local investors are being scared by high interest rate”, he lamented.
By Emma Eke….
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