Nigeria Central Bank Raises Rates to 27.5% as Inflation Nears 34%

BREAKING NEWSNovember 26, 2024 at 3:36 PM UTC

TLDR

CBN raises benchmark interest rate to 27.5% to tackle inflation and stabilize naira.
Nigeria's inflation hits 33.9% in October due to rising fuel and food prices, currency depreciation.
Despite economic challenges, Nigeria records 3.5% growth in Q3, led by the services sector.

The Central Bank of Nigeria (CBN) raised its benchmark interest rate by 25 basis points to 27.5%, marking its sixth hike this year to combat surging inflation and stabilize the naira. The decision by the 12-member monetary policy committee was unanimous, according to Governor Olayemi Cardoso.

Nigeria’s inflation hit 33.9% in October, driven by rising fuel and food prices, as well as the naira's depreciation—down 46% against the dollar this year due to a shift to a floating exchange rate. Cardoso expressed optimism that inflationary pressures from fuel price hikes and currency devaluations would ease by early 2025.

The CBN's efforts come amid foreign exchange reforms and subsidy rollbacks under President Bola Tinubu’s administration, aiming to attract international investment. Despite a cost-of-living crisis, Nigeria recorded a surprising 3.5% economic growth in Q3, led by the services sector.

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Key Takeaways

The rate hike underscores Nigeria’s focus on price stability amid record inflation and currency challenges. While reforms to liberalize the naira and cut subsidies have strained domestic households, they are part of a long-term strategy to boost investor confidence and economic efficiency. The country's better-than-expected growth highlights resilience, but sustained stability will depend on managing inflation and addressing foreign exchange liquidity.

Nigeria

Economy

Inflation

Interest Rates

Central Bank