{"id":69219,"date":"2024-03-04T08:30:55","date_gmt":"2024-03-04T08:30:55","guid":{"rendered":"https:\/\/everyday.ng\/?p=69219"},"modified":"2024-03-04T08:30:55","modified_gmt":"2024-03-04T08:30:55","slug":"the-extreme-and-continuous-monetary-tightening-by-the-cbn-are-we-on-the-right-track","status":"publish","type":"post","link":"https:\/\/everyday.ng\/?p=69219","title":{"rendered":"The extreme and continuous monetary tightening by the CBN, are we on the right track?"},"content":{"rendered":"

By Segun Sanni<\/strong><\/span><\/p>\n

The Buhari government did great damage to Nigeria\u2019s economy for the excessive money it created and threw carelessly into the economy. We\u2019re facing the extremely negative impact of that excessive monetary expansion through its devastating contribution to galloping inflation and pernicious pressure on our exchange rate. <\/span><\/p>\n

Unfortunately, we can\u2019t point to much positive that the money the Buhari government borrowed and created was spent upon. <\/span><\/p>\n

The Tinubu government has taken the very wrong step by attempting to take out the excess liquidity by an unprecedented overreliance on monetary policies. Raising CRR from 32.5% to 45% and interest rates by 4% (to 22.75%) at once will produce a crowding out effect of chasing the productive sectors of the economy out of the loans market while the coast would be made clear for the government to keep borrowing massively through the high interest rates it has announced. This amounts to less money to the productive sectors of the economy and more money to the government which created the liquidity crisis in the first place. And government officials would still be taking the money to the FX market to buy more dollars and pile even more pressure on the exchange rate. There is absolutely no deterrent to their continuation of this destructive behavior. It\u2019s a free for all. You will therefore not likely achieve the desired objective, yet would have been killing the economy by pushing it towards recession or low growth. That is what Emeka was saying, and which some of us have been saying. They\u2019re driving up interest rates to unprecedented\/crazy levels (22.75%) and crowding out the productive sectors from access to credit.<\/span><\/p>\n