By Elisha Bala-Gbogbo and Chijioke Ohuocha
ABUJA (Reuters) -Nigeria’s central bank kept its benchmark interest rate unchanged on Tuesday for the second time in a row, as expected, noting relative improvements in key macroeconomic indicators that support a moderation in prices in the medium term.
The unanimous decision to hold the rate at 27.50% comes after six hikes last year.
The West African economic giant has been battling high inflation which soared to 28-year highs last year, spurred by President Bola Tinubu’s moves to end costly subsidies and devalue the naira currency after he came to power in 2023.
After a rebasing exercise where the statistics bureau updated its base year and reweighted the inflation basket, annual inflation fell sharply from 34.80% in December to 24.48% in January.
Headline inflation fell slightly last month after increasing in March.
Central bank governor Olayemi Cardoso told a news conference that inflation, mostly driven by high electricity prices and persistent forex pressures, remains a concern for the bank’s Monetary Policy Committee (MPC).
He added that the MPC recognised new government policies designed to increase domestic production, reduce the demand for foreign currency, and thereby lessen the effect on local prices.
Cardoso said members of the MPC also voiced concerns over the recent drop in crude oil prices and uncertainties tied to U.S. trade policy, which could pose new challenges for the oil-producing nation’s income and budget execution.
Razia Khan, chief economist for Africa and Middle East at Standard Chartered Bank, said the rate hold was largely expected.
“In all, little forward guidance was provided, but the Central Bank of Nigeria notably expressed a quiet confidence that it was doing the right thing. Naira stability is testament to this,” Khan said.
(Reporting by Elisha Bala-Gbogbo and Chijioke Ohuocha;Additional reporting by Ayen Deng Bior Writing by Anait Miridzhanian;Editing by Bate Felix and Conor Humphries)
