The Central Bank of Nigeria raised its monetary policy rate by 200 basis points to 24.75% from 22.75%.
This is according to a statement from governor Olayemi Cardoso, as the bank continued a tightening to head off soaring inflation.
This followed its largest rate hike in around 17 years last month, when the bank raised the monetary policy rate by 4 percentage points to try to tame rising prices.
Annual inflation rate is 31.7%; its highest in almost three decades, fanning a cost-of-living crisis that has left millions of people in Africa’s biggest economy and most populous nation struggling to meet their basic needs.
Olayemi Cardoso told a press conference that Monetary Policy Committee (MPC) members were convinced they needed to continue with the tightening cycle to tame inflation but also saw price pressures moderating from May.
He said “considerations of the committee at this meeting focused on the current inflationary pressures and the need to anchor inflation expectations as well as ensure sustained exchange rate stability.”
The committee’s decision was just the second since Cardoso took office last September, as the committee did not hold a meeting under him until February 2024.
Price pressures have been spurred by reforms implemented by President Bola Tinubu in his first year in charge, chiefly ending a costly fuel subsidy and devaluing the country’s legal tender twice.
President Tinubu has defended those reforms as necessary to lift spur economic growth and attract investment, but they have prompted public outrage and, in some cases, desperation.
David Omojomolo, Africa economist at Capital Economics said further tightening was expected in the next two Monetary Policy Committee sittings before authorities ease off and keep rates steady.
Omojomolo was quoted as saying “we expect Governor Cardoso’s desire to bring the inflation crisis to a close and also strengthen the naira will lead to more tightening.”
Nigeria’s sovereign international dollar bonds rose after the hike. The 2029 note jumped the most and was up 1.4 cents on the dollar to 97.9 cents; its highest level in almost two years, according to Tradeweb data.
