The rate at which inflation edges up in the country has gone beyond the Central Bank of Nigeria’s (CBN’s) control, Head of Research, Nigerian Economic Summit Group (NESG), Mr. Olusegun Omisakin, has said.
Speaking in Lagos, Omisakin said the rising inflation had defied CBN’s monetary policy measures, adding that policy tools adopted by the apex bank were only effective in taming inflation arising from demand-supply imbalances.
“In this case, inflation is cost-push. Production cost is high because producers, who want to import intermediate goods for production, do not have access to foreign exchange. Most of them go to the black market and definitely the product from this would be expensive, thereby increasing inflation,” Omisakin said.
According to him, the CBN could not do anything through the monetary policy rate to arrest inflation. He said even if the CBN increased the Monetary Policy Rate (MPR) to 20 per cent, inflation would not come down.
His words: “The inflation we are experiencing now is out of the control of the CBN. The CBN can only address issues that have to do with availability and circulation of money and credit control. It cannot address cost-push inflation, because it cannot provide energy, roads, transport. There are fiscal issues.”
The economist urged the CBN to formulate policies that would boost industrial production and economic growth in view of the economic recession. He also called for co-ordination of fiscal and monetary policies to check the rising inflationary trend in the country.
He pointed out that rising cost of food, transport and energy would reduce if the Federal Government created fiscal policies with effective implementation to address the situation through increased investment in infrastructure and agriculture.
The expert said speedy passage and effective implementation of the 2017 budget would stimulate economic activities.