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The Conduct of Monetary Policy
The Performance of Monetary Policy In 1996
Economic policy measures in 1996 were focused on consolidating and building on the modest gains made in growth and stabilization in 1995. The policies focused on improving economic performance, stemming the tide of high and rising inflation as well as improving the balance of payments position.
The monetary outcome was that broad money (M2) rose by 25.7 percent compared with the 16.8 percent target. Narrow money stock (M1) increased by 26.3 percent compared with the 14.5 percent policy target. Bank credit to the economy rose by 5.0 percent compared with the target growth rate of 12.0 percent. Bank credit to government fell by 10.1 percent compared with a drop of 8.6 percent in 1995. Bank credit to the private sector increased by 21.9 percent compared with the target of 29.5 percent. The exchange rate depreciated with the introduction of the Autonomous Foreign Exchange Market (AFEM) at N82.3: US$1 and inflation decelerated to 29.3 percent as against 72.8 percent of 1995.