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Financial pundits mull synergy between monetary, fiscal policies to ease recession

Leading financial analysts yesterday called for harmonisation of monetary and fiscal policies to effectively tackle the current recession in the country.

Currently, the Central Bank of Nigeria (CBN) manages monetary policies, while the Federal Ministry of Finance manages fiscal policies.

The experts are more worried considering the negativity trailing monetary policy of inflation which they say is not working after all.

The September inflation rate was 17.85 per cent up from the 17.61 per cent in August.

Dr Uche Uwaleke, Head of Banking and Finance Department, Nasarawa State University, Keffi, said that monetary policy was not working chiefly because the economy was facing bigger challenges of recession.

Uwaleke said that there was the need to ease the monetary policy at this time for economic growth.

“I am not surprised that the Consumer Purchasing Index (CPI) has continued to rise in spite of the central bank’s tight monetary policy,” Uwaleke said.

He said that the headline inflation, which was only 9.6 per cent in January, had accelerated to 17.9 per cent in just few months.

 “So, there is the need to ease monetary policy at this time to restart economic growth.

“One cannot continue to do something same way and expect a different outcome,” he said.

Uwaleke said that the key drivers of the inflationary pressure such as high cost of electricity, fuel, housing, clothing, books and foods were outside the control of the apex bank.

Uwaleke said that the high interest rate regime encouraged by high monetary policy rate at 14 per cent, in a bid to tame inflation, had neither succeeded in subduing inflation nor led to significant capital inflows.