(Adds quote, context, detail)
ABUJA, Nov 26 (Reuters) - The Nigerian central bank left its
benchmark lending rate on hold at 13.5% on Tuesday, after a
government decision to close borders with neighbouring countries
sent inflation to a 17-month high last month.
Central bank Governor Godwin Emefiele told a news conference
in the capital Abuja that the decision by the bank's monetary
policy committee (MPC) was unanimous.
He said the impact of the border closures on prices was
"reactionary and temporary" and that the medium-term benefits of
the government's decision outweighed the short-term costs.
Emefiele said he would advise the government to maintain the
closures in the interests of boosting economic output, which has
been recovering relatively slowly in the non-oil sector.
"In view of the uptick in inflationary pressures, (the MPC)
decided that the balance of risks was in favour of protecting
price stability," Emefiele said, after data last week showed
inflation hit 11.6% in October. Emefiele said a central bank decision to set a minimum
loan-to-deposit ratio for lenders had helped lift economic
growth to almost 2.3% in the third quarter, adding that the
policy must be sustained as it had led to a drop in interest
rates. Some banks have been caught out by the initiative, incurring
penalties from the central bank. The majority of economists polled by Reuters last week
predicted that the MPC would keep the lending rate NGCBIR=ECI
on hold in Africa's largest economy and top crude oil producer.
The central bank has been trying to boost growth by
encouraging commercial banks to lend, but it has also kept
interest rates high and liquidity tight to support the currency.
The bank forecasts economic growth of 2.2% this year, while
the International Monetary Fund expects growth of around 2.3%.