Nigeria Raises Interest Rates to Record 27.25% to Combat Inflation

BREAKING NEWSSeptember 24, 2024 at 1:58 PM UTC

TLDR

CBN raises benchmark interest rate to record 27.25% for 13th consecutive hike to control inflation and stabilize the naira
Governor Olayemi Cardoso announces surprise rate increase, with only one out of 12 economists predicting it
Central bank raises rates by 15.75 percentage points since May 2022 to combat high inflation, driven by fuel price hikes and flooding

The Central Bank of Nigeria raised its benchmark interest rate to a record 27.25%, the 13th consecutive hike, as part of efforts to control inflation and stabilize the naira.

The move, announced by CBN Governor Olayemi Cardoso on Tuesday, surprised financial markets, with only one of 12 economists in a Bloomberg survey predicting the increase. The monetary policy rate was previously 26.75%.

The central bank has raised rates by 15.75 percentage points since May 2022 to combat soaring inflation, which slowed to 32.2% in August but remains high. New inflationary pressures have emerged from a 45% increase in gasoline prices and flooding in Nigeria’s food-producing regions.

Key Takeaways

The decision comes amid growing public discontent over the high cost of living. Protests in August, sparked by rising fuel prices, saw demonstrators demanding the reinstatement of fuel subsidies, lower electricity tariffs, and reduced import duties. Security forces cracked down on protests, resulting in 21 deaths and over 100 arrests. The CBN's aggressive rate hike reflects its ongoing battle with inflation and economic instability. While the move aims to stabilize prices and the naira, it is likely to deepen public frustration over living costs, amid calls for economic relief measures, including reinstating fuel subsidies and lowering tariffs.

Nigeria

Economy

Interest Rate

Inflation

CBN

Central Bank