Nigeria hikes interest rate by 400bps in major push to curb inflation

Points clés à retenir

The Monetary Policy Committee (MPC) has implemented an unprecedented series of interest rate hikes, totaling 1,025 basis points, since May 2022. These measures aim to address soaring inflation, which reached nearly three-decade highs of 29.9% last month, and stabilize the Nigerian naira. The currency has experienced a significant depreciation of approximately 70% against the US dollar during this period. The depreciation of the naira can be attributed largely to multiple devaluations of the currency since June of the previous year. These devaluations were part of efforts to unify Nigeria's official and unofficial exchange rates, aimed at attracting investors and alleviating a shortage of dollars in the country. President Bola Tinubu initiated these measures shortly after assuming office in May, which included easing currency controls and eliminating fuel subsidies, to stimulate economic growth. While these actions were welcomed by international investors, they have also sparked protests in various provinces across Nigeria.