Floating the naira alone will make life harder for Nigerians – The Cable

Yesterday, the Central Bank governor told the Senate that the economy was stagnating, at the same time experiencing a high inflation. Interestingly, he still tried to press the reassurance button. Mr. Godwin Emefiele refrained from calling a spade a spade. Actually, Nigeria is experiencing a stagflation, a word the governor must have tried as much as possible not to use. One country to have experienced a full-fledged stagflation, in recent times, is Zimbabwe.

One characteristic of a stagflation is that prices keep rising at a period when growth is sluggish and unemployment is high. This is abnormal and very devastating. Of course, as expected, Mr. Emefiele refrained from telling his audience, the Senate, who needed some reassurance from him, that once this abnormality starts, it is hard to stop.

When people don’t have cash in their pockets, you expect the prices of goods to come down, but in a stagflation the prices keep going up. And trying to use monetary policy instruments and exchange rate adjustments to solve this malaise is actually a waste of time and effort.

Read more at https://www.thecable.ng/floating-naira-alone-will-make-life-harder-nigerians