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CBN projects 12% inflation, 3% GDP growth in 2019

 Babajide Okeowo

Ahead of the 266th Monetary Policy Committee, MPC meeting on Monday and Tuesday, March 25-26, 2019, the Governor, Central Bank of Nigeria, Mr. Godwin Emefiele, has projected that the current monetary policy stance of the bank is expected to continue while inflation is estimated to rise to 12 per cent and moderate thereafter. He also projected that Nigeria’s Gross Domestic (GDP) growth will rise to three percent in 2019 as against 1.93 percent recorded in 2018.

He disclosed this while making a presentation on ‘Setting the agenda for economic growth and business confidence following the conduct of elections in 2019’, at a conference held in Lagos recently.

In his words, “The CBN has set the post-election agenda for the nation’s monetary policy, projecting that the current monetary policy stance of the bank is expected to continue while inflation is estimated to rise to 12 per cent and moderate thereafter,” he said.

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Emefiele, who hinged the monetary policy stance of the bank on rising inflation expectations, however, noted that the bank would adjust the policy rate in line with unfolding conditions and outlooks.

Like it did in 2018, he said the bank would continue in its drive to ensure that the policy interest rate was set to balance the objectives of price stability with output stabilisation.

While basing the inflationary projection on productivity gains in the agricultural and manufacturing sectors, he said the Gross Domestic Product was expected to pick up in the first half of the current year owing largely to the continued efforts at driving indigenous production in high-impact real sector activities.

“With continued efforts at driving indigenous production in high impact real sector activities especially agriculture and manufacturing, the GDP is expected to pick up in the first quarter of the year. This is buoyed by the anticipated budgetary and electioneering spending which took place in the first quarter of the year. GDP is projected to rise to 3% in 2019 in contrast to 1.80 in 2018” he revealed.

On the exchange rate policy, he said the bank, in spite of expected pressures from the volatility in the crude oil markets, would maintain its stable exchange rate over the next year.

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“Gross stability is projected in the foreign exchange market, given increased oil production and contained import bill,” he said.

While warning that the issues that led to the economic crisis between 2015 and 2017 remained visible, Emefiele stressed the need to significantly increase the country’s policy buffers, including fiscal measure, to increase its external reserve.

He also reiterated the need to diversify the revenue structure of the Federal Government, in order to reduce dependence on direct proceeds from the sale of crude oil.

He advised that cheap financing would be provided to boost local production of priority goods in critical sectors of the economy in order to reduce reliance on foreign imports.

Latest statistics by the CBN and the National Bureau of Statistics put the country’s inflation rate at 11.31 per cent in February while the GD

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