Nigeria hikes interest rate again to curb inflation, steady naira

BREAKING NEWSJuly 24, 2024 at 12:42 PM UTC

TLDR

Central Bank of Nigeria raises key interest rate by 50 basis points to 26.75% to combat inflation.
Monetary policy committee widens asymmetric corridor for borrowing and deposits.
Inflation reaches 34.2% in June, prompting 12th consecutive rate hike to address economic challenges.

The Central Bank of Nigeria has raised its key interest rate for the 12th consecutive time, continuing its efforts to control inflation. The monetary policy committee increased the benchmark rate by 50 basis points to 26.75%, as announced by Governor Olayemi Cardoso during a press briefing in Abuja.

Additionally, the central bank widened its "asymmetric corridor," setting the cost for lenders to borrow at 500 basis points above the policy rate, while the return on their deposits was set at 100 basis points below the benchmark rate.

Since the tightening cycle began in May 2022, the central bank has increased borrowing costs by 1,525 basis points to address rising inflation, which accelerated for the 18th consecutive month to reach 34.2% in June.

Points clés à retenir

Inflation in Nigeria has been driven by the government's partial removal of fuel subsidies and a 70% depreciation in the naira since June 2023, following currency reforms that loosened its de facto peg against the dollar. Despite these challenges, six of Nigeria's Eurobonds were among the top 20 performers in a Bloomberg index of emerging and frontier-market sovereign debt. The price for securities due in February 2038 rose by 0.6 cents to 80 cents on the dollar, while the prices for notes due in 2051, 2047, and 2033 also gained.

Interest Rate

Inflation

Nigeria

Naira

Economy

CBN