Dr Adetona Adedeji, Acting Director of the Central Bank of Nigeria’s (CBN) Banking Supervision Department, has reaffirmed the bank’s decision to prioritise battling inflation over addressing rising unemployment rates.
He stated this in the second episode of the CBN Talk podcast, which was posted to the bank’s YouTube page on Friday.
During his speech, Adedeji emphasised that the central bank’s principal mission is to reduce inflation, while noting the possibility of consequences in other areas.
He said: “The ultimate objective is for us to combat inflation. That is exactly what the central bank is doing today. Whatever it takes to fight inflation, we are going to do that. It may have some impact in some area.”
We can’t fight two things at the same time
Adedeji further explained the difficulties of simultaneously addressing both inflation and unemployment.
He underscored the importance of prioritizing inflation control, suggesting that managing inflation effectively leads to more stable conditions for discussing economic growth.
He said: “We can’t fight two things at the same time. There will be trade-offs. If you are fighting inflation, you can’t fight unemployment at the same time. Even if you fight unemployment, it cannot be up to the desired level. So, you have to choose: either you fight inflation or you fight unemployment. They two are macro-economic objectives that are very critical to the development of the economy.
“But we are saying if we are talking of economic growth, it is because the economy is still relevant and available that is why you are talking of economic growth. But if you look at an economy that inflation has killed, you will not even talk of economic growth.
“So, it is very important we concentrate and fight inflation. By the time we bring inflation down, we start talking of economic growth.”
The CBN’s decision reflects a strategic choice in policy direction, focusing on stabilizing the economy’s general price levels before addressing job creation and unemployment issues. This approach indicates the bank’s commitment to ensuring long-term economic stability and growth by first tackling the more immediate threat of inflation.