Nigeria has retained its double-digit interest rate at 14 percent, despite a weak macroeconomic performance.
The nation's Monetary Policy Committee (MPC) on Tuesday said it acknowledged the daunting economic challenges but opined that rates reduction alone cannot move the economy out of stagflation.
According to the policy makers, which also left the cash reserve ratio at 22.5 percent and liquidity ratio at 30 percent, "the greatest challenge to the Nigerian economy today remains incomplete fiscal reforms which raise costs, risks and uncertainty".
Nigeria's economy formally entered recession in the third quarter of the year when its Gross Domestic Product in real terms declined by 2.06 percent in the second quarter year on year. Also, the West African country's inflation rate for August increased to 17.6 percent when the National Bureau of Statistics released its report last week.
Speaking to reporters in Abuja, Godwin Emefiele, governor of the Central Bank of Nigeria and head of the MPC, called on the government to launch robust fiscal policies to save the Nigerian economy from recession. "The urgency of a monetary-fiscal policy retreat along with trade and budgetary policy to design a comprehensive intervention mechanism is long overdue," he opined.
Minister of Finance Kemi Adeosun had on Monday joined the call by economy and financial experts in the country for rates reduction to enable the government borrow domestically to boost the economy without increasing debt servicing costs.
Emefiele said the calls for rate reduction came mainly from the belief that reducing interest rates will spur credit growth in the private and public sector, which will help provide liquidity to stimulate consumption and investment spending.
He said the apex bank, which lacked the instruments required to directly jump-start economic growth, anchored the interest rate decisions on sound judgment, fundamentals and compelling arguments for such policy interventions.
The apex bank would, however, continue to deploy its development finance interventions to complement the overall effort of fiscal policy toward reinvigorating the economy, he added.
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