CBN holds Benchmark Interest Rate at 14%

Nigeria's central bank kept its main interest rate on hold on Tuesday for the second month in a row, as Africa's biggest economy contends with its first recession in 25 years due to low oil prices combined with high inflation.

Prices for oil, Nigeria's main export, have languished in the last few years, while inflation accelerated to a more than 11-year high of 18.3 percent in October, creating the conditions for 'stagflation' - low or no growth combined with high prices.

Governor Godwin Emefiele said the decisions to keep the benchmark interest rate at 14 percent and keep cash reserve ratios for commercial banks at 22.5 percent were agreed by all 10 members of the Monetary Policy Committee present.

"Considering the importance of price stability and being mindful of the limitations of monetary policy in influencing output and employment under the conditions of stagflation, committee decided unanimously in favour of retaining the current stance of monetary policy," said Emefiele.

The rate decision was expected by most of the economists polled by Reuters last week who saw the policy in line with the banks' efforts to resuscitate growth in the economy.

The rate decision comes a day after data showed the recession was deepening, with Nigeria's gross domestic product contracting in the third quarter by 2.24 percent year-on-year.