Nigeria's central bank raised its benchmark lending rate by 25 basis points to 27.50% on Tuesday, citing new inflationary pressures in Africa's most populous country.

Governor Olayemi Cardoso told the press in Abuja, the capital, on Tuesday that the monetary policy committee had decided to raise the key rate by 25 basis points, to 27.5%. This increase is less than the median estimate of six economists polled by Bloomberg, who expected a rise of half a

He said that the decision of the 12 members of the MPC was unanimous and that there was “no going back” in the fight against inflation.

“Members reiterated their commitment to price stability, the foundation of a thriving Nigerian economy,” said Cardoso. “We expect better results in the first quarter of 2025.

Nigeria's annual inflation rate soared to 33.9% in October, near its highest level since 1996, fuelled by rising fuel and food prices and by persistent currency weakness, which makes imports more expensive.

“Governor Cardoso is optimistic that the effects of rising gas prices and the sharp devaluation of the naira on inflation will soon lessen. So we think the monetary tightening cycle is now over,” said David Omojomolo, Africa economist at Capital Economics. “That said, we don't expect interest rates to fall until the second quarter of next year.

The naira depreciated by about 46% against the dollar this year, in part due to an effort to let it float freely after years of being stuck at an artificially high exchange rate.

The unit also suffered from a lack of liquidity, despite efforts by the central bank to provide support by providing rare dollars to the local market to meet domestic demand for American currency.