Nigeria’s central bank has once again raised its benchmark lending rate by 50 basis points to 27.25%, marking its fifth rate hike this year. The move, which surprised analysts, aims to combat persistent inflation. Analysts had expected the rates to hold steady due to recent inflation drops. Central Bank Governor Olayemi Cardoso noted that while headline inflation declined to 32.15% in August, core inflation remains elevated due to rising energy prices, posing serious concerns. The bank’s focus on inflation control over economic growth comes amid Nigeria’s worst cost-of-living crisis in decades, exacerbated by government cuts to petrol and electricity subsidies. Despite efforts to stabilize the naira, lingering inflation risks remain, particularly from crop damage caused by floods in northern Nigeria. Economists, including Bismarck Rewane of Financial Derivatives Company, expect higher borrowing costs from the rate hike. Nevertheless, they acknowledge the potential benefit of stabilizing the currency.
SOURCE: NAIRAMETRICS
