Um…. worrying?

Ok not to harp on the IMF inflation exchange rate issue but I read an article that was rather worrying. This article. Why is it so worrying? Because everyone every economist knows that the central bank cannot really “care about growth”. Meaning if they try to care about growth and use policy to try to influence growth (in this case development) the economy ends up with HIGH inflation and no reasonable impact on growth. Why? Because money is really just paper. The Central bank must care about inflation and inflation and inflation because price stability is crucial for any real growth. That is why central banks exist!

Even in the event they do care about growth they shouldn’t come out and publicize it. If they do people automatically expect higher inflation in the future and act on those expectations now. So even if the CBN does not eventually try to use policy to influence growth we will still end up with higher inflation anyway.



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