Adenikinju mentioned that slow economic growth, high number of unemployment and rising poverty within the country influenced the decision, couple with Nigeria just exiting recession.
The country had entered recession in the third quarter of 2020 after two consecutive economic contraction starting from the second quarter of the same year.
Although, Nigeria exited in the fourth quarter by a weak recovery rate of 0.11 percent. With this in mind Adenikinju said the monetary policy committee can’t be aggressive with its approach to grow the economy.
“The weak economic growth, rising unemployment and poverty also mean that we cannot aggressively pursue strict price stability at a time we are slowly crawling out of recession.” the economist said.
This was made known in the MPC communique updated and published by the apex bank on Tuesday.
Adenikinju also stated that
“I see the CBN intervention credit as complementary and not substitution to credit from the deposit money banks. Also given the focus of capital expenditure of the government this year, it then means that we can focus on growth and tackle inflation at the same time.”
In his note in the MPC communique, he said the current economic state will negatively impact fixed income earners and welfare of households within the country, as high inflation causes macroeconomic instability.
He said the inflation rate is projected to remain above 17.9 percent in 2021, “The rising inflationary pressure seems to be unabated. Bank Staff projection shows that inflation will remain above 17.9% by 2021M04.
“This is also fueling inflation expectation by economic agents. Nigeria has one of the highest inflation rates in the world. High inflation induces macroeconomic instability. It will negatively affect the welfare of households and fixed income earners.” He said in his note.