Mr Emefiele explained that an increase in the MPR will translate to an increase in the cost of borrowing.
Central Bank governor Godwin Emefiele has announced the retention of the monetary policy rate at 11.5 percent.
Mr Emefiele confirmed on Tuesday that the Monetary Policy Committee (MPC) of the CBN arrived at the decision after a two-day meeting held at the CBN headquarters in Abuja, Channels TV reports.The head of the banking regulatory body disclosed that six members voted for the retention of the MPR while three voted for its increase.
He further added that the liquidity ratio which currently stands at 30 percent as well as the cash reserve ratio which is put at 27.5 percent were retained.
He stated that the MPR is an economy’s baseline interest rate along adding that other interest rates in use in an economy is built on the MPR.
He explained that an increase in the MPR will translate to an increase in the cost of borrowing while reducing access to credit for businesses which according to him could lead to a reversal of the growth trend of the economy.
Expressing worry about the country’s rising inflation rate, the CBN head attributed it to the worsening insecurity and as well as the rise in prices of electricity and petroleum products.
A reduction of the benchmark interest rate from 11.5 percent to 12.5 percent was agreed upon by the committee last September, while other rates was retained.
This decision was aimed at monitoring its impact on the economy which went into recession last year.
