Nigeria central bank holds rate at 12 pct for 7th time

ABUJA (Reuters) - Nigeria's central bank kept interest rates on hold at 12 percent on Tuesday for the seventh time in a row, citing the need to tread a fine line between concerns over higher food inflation and threats to Nigeria's growth from global economic weakness.

Central bank governor Lamido Sanusi delivered the bank's rate decision, saying arguments in favour of raising and cutting had been considered and rejected.

The corridor of plus or minus 200 basis points for borrowing from or lending to the bank, respectively, also remained in place. Analysts had expected the bank to keep rates on hold.

Sanusi said there had been "mixed signals on inflation", with still high but easing rates of core inflation, but with a rise in food inflation, which he said was likely to be linked to flooding over the past two months that had submerged farmland.

"However, the major drivers of food inflation remain outside scope of monetary police alone," he added.

Nigeria, Africa's second-biggest economy, grew 6.5 percent in the third quarter from a year earlier, compared with 6.3 percent in the second quarter, helped by solid growth in the non-oil economy, data showed on Monday.

Sanusi welcomed the slight increase in GDP growth.

But he noted that year-on-year growth was weakening and the risks of the global economic slowdown to the price of oil, on which Nigeria depends for most of its government revenues, remained high.

The bank has kept rates on hold since November after six successive hikes last year - including a 275 basis point rise in October to 12 percent - to ward off speculation against the naira, which fell 4.5 percent against the dollar in 2011.

Source: http://news.yahoo.com/nigeria-central-bank-holds-rate-12-pct-7th-144426339--business.html

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