Nigeria's central bank surprises with a rate hike to 27.25 per cent

Nigeria's central bank surprised the market by raising its benchmark lending rate to 27.25 per cent from 26.75 per cent (NGCBIR=ECI) on Tuesday, with governor Olayemi Cardoso adding that the decision of the monetary policy committee (MPC) was unanimous.

The decision by the committee is the fifth straight rate hike this year, after increases of 50 basis points (bps) in July, 150 bps in May, 200 bps in March and 400 bps in February, its largest in around 17 years.

Analysts had widely predicted the central bank would keep rates unchanged after inflation fell for a second consecutive month in August and the naira currency held steady, converging on both the official and parallel markets after the bank resumed regular dollar sales to dealers to help stabilise the currency.