Nigeria’s central bank hikes interest rate to 24.75% as it battles sky-high inflation, currency crisis
From CNBC: 2024-03-26 09:56:18
The Central Bank of Nigeria raised its key interest rate by 200 basis points to 24.75% to combat inflation and restore credibility, following a historic currency crisis. Officials are expected to continue tightening policy to address rising inflation, which reached 31.7% in February, the highest rate since April 1996.
Nigeria’s naira currency has depreciated by around 70% against the U.S. dollar over a year, hitting a record low of 1,600 naira to the dollar in late February. After the Central Bank cleared a $7 billion backlog of imports, the naira has slightly strengthened, trading at around 1,400 naira.
In the midst of economic challenges, members of Nigeria’s Monetary Policy Committee held differing views on inflation drivers and naira weakness, influencing their votes. While the MPC raised rates by 400 basis points in February, there were debates for smaller and larger hikes. Governor Cardoso advocated for a 425 basis point increase.