Bruce had been thinking about loaning out the winger, but he impressed in a 7-0 win over Morecambe.
The Magpies picked up a great result in the Carabao Cup, and Murphy has benefited from his terrific display.
Bruce told reporters post-game: "I won't be letting him out on loan!
"Not after a performance like that.
"He deserves to stay with us and he has improved enormously.
"I have been very, very pleased even though he didn't make the squad for the weekend.
"We have 20 odd players to choose from.
"But at this particular moment I won't be letting Jacob go on loan."