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The Central Bank of Nigeria (CBN) has held its benchmark interest rate at 13.50 per cent, according to Godwin Emefiele, Governor of the apex bank, who announced the decision of the Monetary Policy Committee (MPC) at the end of its two-day meeting in Abuja on Friday. The committee also retained the cash reserve ratio (CRR) at 22.50 per cent and the liquidity ratio at 30 per cent.

The decision is the third consecutive time the committee has held the benchmark rate since March 2019 when the rate was reduced by 50 basis points from 14 per cent. Before its meeting in March, the MPC had previously kept interest rate at 14 per cent since July 2016 to curb inflationary pressures.

On Tuesday, the National Bureau of Statistics (NBS) reported that Nigeria’s inflation rate declined by 11.02 per cent year-on-year in August, the slowest increase in inflation since January 2016.  

Emefiele, in explaining the MPC’s decision, said loosening credit could increase inflationary and exchange rate pressures as money supply rises. He also said, “tightening in the midst of a fragile growth outlook would increase the cost of credit….Holding will require a clear understanding of the quantum and timing of liquidity injections into the economy before deciding on possible adjustments to the stance of monetary policy.”

Most analysts, including those polled by Reuters, predicted the MPC would reduce interest rate this month to boost economic growth as inflation continues to ease.