The Central Bank of Nigeria, CBN, has decided to retain benchmark interest rate at 14%, saying that monetary policies alone could not totally save the economy.
Governor of the CBN, Godwin Emefiele, made this known after a meeting of the Monetary Policy Committee, MPC, at the CBN headquarters in Abuja.
This is against the advice of the Minister of Finance, Kemi Adeosun, who had urged the CBN to consider cutting interest rates, to make it easier for the federal government to take domestic loans and stimulate the economy.
“We need lower interest rates, because when we are borrowing and interest rates go up, it increases our cost of debt service and it reduces the amount of money that is available to spend on capital projects,” the minister was quoted as saying.
But at the meeting, all the members of the MPC voted to keep interest rate at 14 percent, while cash reserve ratio and liquidity ratio were also maintained at 22.5 percent and 30 percent respectively.
The CBN governor noted that the apex bank was certain that cutting rates without appropriate fiscal plans may not help the economy, calling on fiscal side to fasten the budget-implementation process.
Emefiele said he is more confident of inflow of foreign investment today, than he was during the last MPC meeting, adding that $1 billion had come into the economy in the past two months.
He pointed out that inflation had begun to recede since the bank’s last MPC decision, which indicates that the decisions were having expected effects on the economy.
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