CBN Shelves Commencement of Inflation Targeting

The Central Bank of Nigeria (CBN) said it has shelved the commencement of earlier scheduled inflation targeting expected to start in  January, 2009 to enable the apex bank effectively fashion out the operational framework.
Inflation targeting is a process by which the Central Bank of any country sets out to achieve a certain stated minimum level of inflation within a given period of time using application of monetary policies.
It would be recalled that inflation targeting was one of the agenda included in the strategic agenda for the Naira which was designed to boost the value of the Naira and make it as strong as the United States of Amerian Dollar.
The Strategic Agenda for the Naira, part of which was the re-denomination exercise was unfolded by the CBN Governor, Professor Chukwuma Soludo in 2007 but its implementation was however put on hold on the order of President Umaru Musa Yar’Adua till date.
Mr. Festus Odoko, head of Corporate Affairs, CBN, explained that the shelving of the commencement date does not however mean that the apex bank has jettisoned the programme, but that CBN is put the need policy structures to achieve realistic inflation targeting once started.
Mr. Festus O. Nwaboku, an executive of the National Bureau of Statistics (NBS), warned that care must be taken in applying Consumer Price Index (CPI) changes for inflation targeting.
According to him, changes in the CPI are attributable to seasonal influence should influence should not be taken into account in taking decisions to adjust the interest rate. Similarly, changes in the CPI caused by external factors should not be employed in adjusting the interest rate in an inflation targeted economy.