Nigeria’s central bank increases interest rate to 17.5 per cent

A person holds a new 1000 Naira note as the Central Bank of Nigeria releases the notes to the public through the banks in Abuja, Nigeria, December 15, 2022. REUTERS-Afolabi Sotunde

Nigeria’s central bank stated on Tuesday that its benchmark lending rate would be increased by 100 basis points (bps), bringing it to 17.5%.

Inflation dropped in December for the first time in 11 months, prompting the central bank to take this action.

However, Governor Godwin Emefiele of the Central Bank of Nigeria stated that the monetary policy committee felt the drop needed to be more significant to warrant changing the interest rate.

“For us it is not time to celebrate yet,” Emefiele said at a press conference.

After increasing rates by 500 basis points last year to counteract growing inflation, some experts predicted the central bank would maintain the current interest rate.

The central bank has been seeking to prevent inflation without triggering a recession by cutting off financing to the private sector ahead of elections next month.

Voters will choose a successor to President Muhammadu Buhari, who can only serve a maximum of two terms according to the constitution. They will likely be motivated by concerns about the rising cost of living and lacklustre economic growth, and mounting insecurity.

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