Monetary Policy Needs A Human Face

Elsewhere in the world, the conduct of monetary policy is a serious and exciting business, especially for the outside observers.
The process is remarkably transparent, highly accountable and for the bank watcher, fairly unpredictable. This is what makes it exciting.
In these places, the Central Bank meets regularly on dates published in advance. The Bank’s research into General Economic Phenomena as well as its complication of short term economic conditions are routinely made available to the investor-analyst community, the academia and indeed anyone who cares to know. In turning the bank regularly taps research from the private sector.
In the US, whose policy openness is the envy of many around the world even the minutes of Central Bank meetings are published for the benefit of the public (readers interested in the minutes of the US federal reserves, for example, may visit the following website: www.federal reserves.gor. At the same site may be found the famous “Beige Book”, which provides painstaking accounts of local economic conditions and forms a core component of the basis of monetary policy in America).
In countries such as US, central bankers are allowed a high (not absolute) degree of independence, while being held publicly accountable for their actions. Several times in the year, the Central Bank Governor must appear before parliament to report on his conduct of monetary policy. He is grilled endlessly, and his statements become the subject of public debate and analysis thereafter. The sum effect of all this is a process more reflective of, and responsive to, real life economic conditions than is the case elsewhere?
The process promotes market efficiency and helps business to plan better. Its impact on the economic fortunes of the public is more assessable. Not so in Nigeria. Here the secrecy surrounding the conduct of monetary policy is akin to the hematic repulsiveness of a monaster. We wake up one morning to hear on radio that our central bankers (whoever they are) have decided to raise or trim interest rates.
This is followed by clicked-filled press releases about moping up excess liquidity and an exchange rate stability that is increasingly becoming more apparent than real. The kind of openness and creativity that must inform monetary policy are woefully lacking in these releases and their underlying policies.
With rare expectations, such as the bank’s study of the impact of the energy crisis last year, the central bank produces no significant time relevant research on the Nigeria’s economy. Even the bank’s periodic compilation not creation of macro economic data is invariably so late as to be analytically worthless.
In an information age where timely, accurate and adequate information is the sine qua-non of an efficient organization, such tardiness represents a serious indictment of the bank of Nigeria, the premier financial institution of the country.
Esoteric and routinised theorizing about the economy at the expense of real-life issue has become, disturbingly, standard fare for the central bank. Yet, for monetary policy to be effective and for that matter relevant, it must speak to the concerns of ordinary Nigerians; it must be grounded in real issues such as economic output, job creation and wages growth. Whether or not the money stock expanded by 6 or 60 percent last year means nothing to the unemployed university graduate whose job prospects grow bleaker by the day or the civil servant whose take home pay can barely get him through his office door.
This means that the Central Bank must abandon theoretical posturing and bureaucratic clichés and move to anchor monetary policy in the real economy. Ideally, direct measures of economic output and jobs, for instance, will serve as a solid foundation for monetary policy.
But the institutions and procedures for the collection of such measures have been allowed to deteriorate so much over the years that we cannot reasonably rely on them in the foreseeable future.This is where creative policy research and policy making becomes essential.

Nkpemeriye Mcdominic