The Organization for Economic Cooperation and Development (OECD) countries in 2008 recommended the imposition of some form of capital controls that a… - Sarah Alade

It is also expected that the fiscal authorities would provide direction and leadership while the monetary authorities would facilitate an enabling business environment conducive for growth. Nonetheless, the overriding mandate of the Bank continues to be price stability across the major price rates: inflation; loan interest; and foreign exchange. Stability in prices is essential for investment and consumption. Monetary policy can help through influencing short-term interest rate, but monetary policy alone is not enough to pull the country out of recession. Fiscal policy must come in and do its part to fully pull the economy out of recession.

For Nigeria, like most developing countries, policy has often times focused on the flexible exchange rate regime and financial integration, emphasizing monetary policy independence. However, as globalization, capital flows constraints and other adverse phenomena set in, it has become imperative to seek a convergence.

In recent years, academics and policymakers have shown increasing interest in the independence of central banks with respect to the formulation of monetary policy. In the European Union, this interest was realized in the Maastricht Treaty, which gave the European Central Bank complete autonomy in conducting the monetary policy without political intrusion. Most empirical studies support central banks’ autonomy in the conduct of day-to-day monetary policy operations devoid of political pressure. This enables them to deliver better inflation outcomes, without compromising economic growth. The CBN Act of 2007 bestows independency on the Bank.