Experts attribute drop in inflation to tight monetary policy
Inflation
By Chinyere Joel-Nwokeoma
Lagos, Aug. 16, 2018 (NAN) Some financial experts on Thursday attributed the consistent drop in inflation rate to the tight monetary policy of the Federal government, leading to a stable foreign exchange rate.
They stated this in separate interviews with the News Agency of Nigeria (NAN) in Lagos, while reacting to the July inflation figure recently released by the National Bureau of Statistics (NBS).
NAN reports that for the 18th consecutive time, the Consumer price index, (CPI) which measures inflation crashed to 11.14 per cent in July from 11.23 per cent in June, representing 0.09 per cent fall.
Prof. Sheriffdeen Tella of the Economics department, Olabisi Onabanjo University Ago-Iwoye, Ogun said the tight monetary policy of the Central Bank of Nigeria (CBN) was the major factor for responsible for the decline in inflation rate.
Tella added that general fall in demand due to lack of funds for purchase of goods contributed to the development.
He noted that the consistent fall in the inflation rate was good for the economy.
Tella said general fall in demand for money needed to be tackled in order not to return the country to recession.
The economist said that domestic production must be encouaged through credit expansion to improve employment.
He, however, urged the apex bank to shelve the idea of increasing interest rate because of the political environment.
Tella said lower interest rate would encourage production and boost employment and as well help to sustain the fall in inflation.
Malam Garba Kurfi, the Managing Director, APT Securities and Funds Ltd., said the fall in inflation would lead to lower yield on Treasury bills and the Federal Government bonds.
Kurfi said lower inflation should as well lead to lower cost of funds in an ideal economy.
“For the borrower the drop inflation should lead to lower rate of borrowing; this is yet to be reflected by the banks,” he said. (NAN)
JNC/SA
Edited by Salif Atojoko
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Experts attribute drop in inflation to tight monetary policy
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