Nigeria’s central bank kept its benchmark interest rate at 14 percent on Tuesday, resisting a call from the country’s finance minister to lower borrowing costs.
The CBN Governor, Mr Godwin Emefiele, on Tuesday read the communique announcing decisions reached at its September meeting in the nation’s capital, Abuja.
The committee agreed to keep the Monetary Policy Rate at 14 percent, the Cash Reserve Ratio at 22.50 percent and the Liquidity Ratio at 30 percent.
Mr Emefiele 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,” he said.
Finance Minister Kemi Adeosun said on Monday the central bank should lower interest rates so that the government can borrow domestically to boost the economy.
But after raising the benchmark interest rate by 200 basis points to 14 percent when it last met in July, the monetary policy committee decided to leave borrowing costs unchanged.
Central bank governor Godwin Emefiele said the MPC had considered calls for a rate cut but concluded that the biggest challenges the economy faces were “unsystematic and incomplete structural reforms” which raised “cost, risk and uncertainty”.
Economists polled by Reuters last week predicted that the central bank would keep its benchmark interest rate at 14 percent and reiterate its focus on resuscitating growth.
“The Central Bank of Nigeria disappointed our expectation for further gradual interest rate tightening,” Razia Khan, Chief Economist Africa at Standard Chartered Bank, said in an email.
“While the MPC resisted giving in to political pressure to cut interest rates, and positive real market interest rates provide an important mitigant to the lack of further policy tightening, nonetheless, we expect markets to be disappointed with this outcome.