In a move to encourage capital inflows into the Nigerian economy, the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has decided to keep the Monetary Policy Rate (MPR), which is the benchmark interest rate at 14 percent on Tuesday, and also maintained existing Cash Reserve Ratios for Deposit Money Banks (DMBs) at 22.5 percent.
At the end of its two day meeting, the committee agreed to also retain the Liquidity Ratio at 30 percent.
The apex bank Governor, Mr. Godwin Emefiele, on Tuesday read the communique announcing decisions reached at its September meeting in the nation’s capital, Abuja.
Emefiele also told newsmen that the CBN was no longer a dominant player in the foreign exchange market after floating the nation currency, naira in June this year.
The CBN boss explained that while challenges in the economy remain, monetary policy alone cannot boost growth. “Cutting interest rates is not advisable and the current stance will help to limit inflation.
Meanwhile, the Finance minister, Mrs. KemiAdeosun had on Monday urged the MPC to lower the interest rates, so as to enhance domestic lending, Finance.
The minister believed that this would enable the government to borrow domestically, as well boosts the nation’s economy, which has been in recession, without increasing its debt-servicing costs.
Adeosun said she is working with the debt office, Nigeria’s sovereign wealth fund and the pension industry to issue an infrastructure bond to raise money for road and housing projects, although she did not elaborate.
She said she wanted the central bank to reconsider its July interest rate hike, which it implemented to help support the naira and attract foreign investment inflows.
Also, Nigerians have charged the MPC to deliberate meaningful economy policies and come out with economic decision that would guarantee proper solution to the present recession in the country.
But at the end of its meeting on Tuesday in Abuja, the central bank and the nation’s economy policy committee retained all the rates that was jerked up two months ago.
However, Nigeria is currently in a recession after official data from the National Bureau of Statistic showed that it’s Gross Domestic Product (GDP) contracted by 2.06 percent in the second quarter, sending Africa’s biggest economy into a recession after a decline in the first quarter.