The Governor of the Central Bank of Nigeria, Mr Godwin Emefiele, has said the bank will pursue expansionary monetary policies to fight recession because the fiscal policy was already constrained.
Emefiele said this was necessary to curb the rising inflation and address recession in the economy.
He said this was part of the resolutions of the Monetary Policy Committee meeting held last week.
He said, “The committee was therefore of the view that to abate the pressure, it had no choice but to pursue an expansionary monetary policy using development finance policy tools, targeted at raising output and aggregate supply to moderate the rate of inflation.
According to Emefiele, the Q2 contraction may lead to a recession, if the third quarter of 2020 output growth numbers further show a contraction.
The CBN governor said this was because with the recent removal of subsidy on fuel price, the increase in energy prices, and the adjustment of the exchange rate, inflationary pressure would no doubt persist unless MPC considers options that would deal with the pressure aggressively.
He said this was the reason the MPC would continue to play a dominant role in the achievement of the goals of the Economic Sustainability Programme through its interventionist role to navigate the country towards a direction that would boost output growth and moderate the level of inflation.
Emefiele said given that the currency adjustment was a causal factor in determining the price of petroleum products and energy prices, the MPC believed that the CBN management must take bold actions to stabilise the exchange rate.
He said the CBN was further enjoined by the MPC to continue to provide funding to sectors that would resolve the supply constraints in petrol pricing, energy pricing and food availability.