Why we retained monetary policy rate at 11.5% – Emefiele

By our reporter| The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) on Tuesday voted to retain the monetary policy rate at 11.5 percent.

Nigeria’s CBN Governor, Godwin Emefiele who made the announcement at the end of a two-day meeting at the CBN headquarters, also disclosed that the committee retained the liquidity ratio at 30 percent and cash reserve ratio (CRR) at 27.5 percent.

According to Emefiele, six members voted to maintain all parameters while three voted to increase the MPR.

The MPR he said, is the baseline interest rate in an economy and every other interest rate used within an economy is built on the MPR.

Emefiele explained that increasing the MPR will increase the cost of borrowing and reduce access to credit for businesses which he said might reverse the growth trend of the economy.

He equally expressed concern over the nation’s rising inflation rate triggered by insecurity and a rise in the prices of petroleum and electricity.

It will be recalled that the committee in September 2020 agreed to reduce the benchmark interest rate to 11.5 percent from 12.5 percent.

It was also decided that the rate and others should be left intact so as to monitor its full impact on the economy, which officially slipped into recession in the third quarter of the year.