The Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, has said that Nigeria’s economy is in stagflation, despite the improved gross domestic product report of the National Bureau of Statistics for the first quarter of 2021.
Emefiele described the GDP growth numbers as weak.
In economics, stagflation or recession-inflation is a situation in which the inflation rate is high, the economic growth rate slows, and unemployment remains increasingly high.
It was against this backdrop that on Tuesday, CBN’s Monetary Policy Committee decided to retain the Monetary Policy Rate at 11.5%.
Emefiele, while taking this position at the end of the MPC meeting in Abuja on Tuesday, said his team was determined to make a significant change through the various interventions of the apex bank.
He said, “Nigeria is one country that is in a situation that is out of the ordinary.
“Out of the ordinary because we find Nigeria being one country that is challenged by stagflation.
“Stagflation is a situation where inflation is high, prices are running high and at the same time, output growth, in this case the GDP, is contracting and if you understand how this works, you would know that as an MPC, your core responsibility is to rein in inflation by ensuring that you keep the price and monetary stability mandate.
“On the other hand, the economy is confronted by a contracting output, where growth is negative.
“The normal way to recover from a contracting economy is by easing and injecting liquidity into the economy to stimulate consumption and investments and increase government expenditure.
“We are in a situation in which the objectives or goals are moving in opposite directions.
“What do we do? We will remain, as much as possible, pro-growth but at the same time, we will keep our eyes on whatever can be done to rein in inflation.”