On Tuesday, the central bank of Nigeria announced that it would raise its benchmark lending rate by 100 basis points (bps), to a rate of 17.5%.
The central bank made this decision as a result of the first decrease in inflation in 11 months which occurred in December.
The monetary policy committee believed the decline needed to be more significant to justify reducing the interest rate, according to Central Bank of Nigeria Governor Godwin Emefiele.
“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.
