Nov. 3 (Bloomberg) -- Nigeria’s central bank left its benchmark interest rate unchanged as economic growth accelerated even after commercial banks tightened lending.

The monetary policy rate was held at 6 percent, bank Governor Lamido Sanusi said at a briefing today in the capital, Abuja. The key lending rate was left at 8 percent, while the borrowing rate was reduced to 2 percent from 4 percent.

The measures are “aimed at improving system liquidity and financial stability, to regenerate confidence in Nigerian markets and to further stimulate growth,” Sanusi said.

The economy expanded 7.2 percent in the second quarter, compared with 4.5 percent in the previous three months, and will grow about 7.6 percent in the third quarter, Sanusi forecast today. Growth may pick up further after the central bank completed a bailout of the banking industry that cost 620 billion naira ($4 billion) and aimed to avoid bankruptcies and ease a mounting credit freeze.

“Concerns remain over liquidity and credit growth,” Markus Schneider, an analyst at London-based UBA Capital, said in an e-mail before today’s decision.

At the same time, Nigeria’s economic growth rate could “easily” be in double digits if the country invested more in power generation and infrastructure, Sanusi said last week.

The key rate was last cut by 1.75 percentage points in April.

Bail Out

The central bank has injected funds into the banking system and sacked eight bank chief executive officers to prevent mounting bad debts from crippling the system. The yield on the interbank market has fallen to 4.5 percent from a peak of about 22 percent at the height of the credit crunch, according to the Financial Markets Dealers Association.

Eurasia Group, a New York-based research company, said in May that banks may have as much as $10 billion of toxic assets. The bad debt is partly the result of at least 1 trillion naira of margin loans used to buy shares as equities soared almost 13- fold since 2000, according to Bank of America Corp. Nigeria’s All Share Index has tumbled 31 percent this year after declining by 45 percent in 2008.

The central bank may start buying margin loans soon to boost lending, Sanusi said. Legislation setting up an asset management company to buy the loans will be sent to legislators next week, he said.

The purchases will ”stimulate activity in the capital market” and improve banks’ balance sheets, Sanusi said.

Inflation slowed to 10.4 percent in September from 11.1 percent in the previous month, the Nigerian Bureau of Statistics said on Oct. 15. The inflation rate will probably fall to 9 percent by the end of the year, Sanusi has forecast.

To contact the reporter on this story: Paul Okolo in Abuja pokolo@bloomberg.net.

Last Updated: November 3, 2009 11:25 EST