Nigeria's Central Bank Surprises with Rate Hike Amid Inflation Combat

Nigeria's central bank unexpectedly raised its benchmark lending rate by 50 basis points to 27.25% in an effort to control persistent inflation. This marks the fifth rate hike this year. Despite a recent dip in inflation, ongoing energy price rises and cuts in subsidies continue to pose inflationary risks.

Nigeria's central bank caught analysts by surprise on Tuesday, elevating its benchmark lending rate by 50 basis points to 27.25%. The move, announced by Central Bank Governor Olayemi Cardoso, aimed to address persistent inflationary pressures that have exacerbated the worst cost-of-living crisis in a generation.

This latest increase marks the fifth rate hike of the year, following adjustments in July, May, March, and February, the latter being the largest in 17 years. Despite expectations for a rate freeze after an inflation dip and naira stability in August, the central bank prioritized inflation control over economic growth.

Governor Cardoso pointed out that the rate hikes had helped moderate inflation, but concerns linger due to rising energy prices. He emphasized the ongoing uptrend in core inflation and warned that recent petrol price increases could undermine the slowdown in headline inflation observed last month.

(With inputs from agencies.)