Nigeria Surprisingly Raises Benchmark Interest Rate to 12%

LAGOS, Nigeria, Capital Markets in Africa – Nigeria’s central bank Monetary Policy Committee (MPC) hikes the policy rate by 100 basis points to 12 percent after lowering it from a record 13 percent in November 2015 and kept it in January 2016, Governor Godwin Emefiele informed reporters on Tuesday in Abuja, the capital.

The cash-reserve ratio was also increased to 22.5% from 20%, the Governor said.

Nigeria’s inflation rate rose to 11.4% in February from a year ago, exceeding bank’s 6-9% target.  Headline inflation has been on a steady rise since December 2014 (8.0%) with the only decline in October 2015. The current inflation level is the highest recorded since December 2012 (12.0%).

The hike in rate is a surprise to the market, as 14 economists surveyed by Bloomberg said the Central Bank of Nigeria will probably maintain its key interest rate unchanged at 11 percent on Tuesday