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Nigeria’s Central Bank Hikes Interest Rate to 26.25%

On Tuesday, Nigeria’s central bank announced it has increased its benchmark lending rate by 150 basis points to 26.25%, up from 24.75%. This marks the third rate hike in 2024, following significant increases in February and March of 400 and 200 basis points respectively. The move aims to address soaring inflation, which hit a 28-year high of 33.69% year-on-year in April, exacerbated by subsidy cuts on petrol, electricity subsidies, and naira devaluations. Central bank officials emphasize that the decision is part of broader measures to stabilize the economy, curtail inflation, and strengthen the naira. The rate hike is expected to impact borrowing costs, potentially slowing down consumer spending and investment but aiming to bring long-term economic stability. Analysts had anticipated this hike due to the country’s inflation, which continues to rise despite the bank’s efforts.