Tight monetary policy implemented by the Central bank of Nigeria has been controlling inflation and rapid economic expansion for a while now. Tight monetary policy makes use of interest rates and money supply to regulate the economy.
The primary aim of this is the management of inflation, unemployment and maintenance of currency exchange rates. This is achieved using the tolls: interest rates, reserve requirement and open market operation.
This policy is mostly contractionary as it limits the economy from the downside of accelerated economic growth.
Recently, the CBN has announced that it intends to continue this tight monetary policy in Nigeria. It further states that it will increase funding to the agricultural sector.
The Central bank hopes to maintain a stable rate given the strength of Nigeria’s reserve. Furthermore, it hopes the economy will see more growth and reduced unemployment from May 2019 as a result of this policy.
“The Central Bank of Nigeria will aggressively deepen its foray into development banking. We shall ensure adequate support to the producers of products such as rice, fish, tomato, textile, palm oil and others” Godwin Emefiele said.