Nigeria leaves rates at 6.0 pct, sees inflation risk

By Nick Tattersall

ABUJA (Reuters) - Nigeria's monetary policy committee left its benchmark interest rate at 6.0 percent on Tuesday and said government plans to abolish fuel subsidies posed a major inflationary risk in sub-Saharan Africa's number two economy.

"The central bank ... has to take a balanced view of the measures required for fostering growth prospects and containing inflationary pressures on a sustained basis and also to further strengthen the liquidity management," Central Bank Governor Lamido Sanusi told reporters.

Sanusi said the central bank was altering its 2 percent corridor for lending and deposit rates around the benchmark rate (MPR) to 200 basis points above the MPR for lending and 400 basis points below the MPR for borrowing.

Up to now, the lending corridor before was two percentage points either side of MPR.

"The idea is that the high rates have given (banks) the perverse incentive to keep their money overnight in the central bank rather than lend it to their customers," he said.

"So this is to encourage them to lend it prudently and look for higher returns."

The central bank chief said provisional figures showed Nigeria's economic growth accelerated to 7.58 percent in the third quarter from 7.22 percent in the second quarter.

But broad money supply (M2), up 5.6 percent year-on-year by the end of September, reflected a slowdown in credit to the private sector and suggesting the need for continued "accomodative monetary policy", he said.