Nigeria Central Bank Holds Interest Rate at 27.5% Amid Inflation Risks

Nigeria's central bank has kept its benchmark interest rate steady at 27.5% for the seventh consecutive time to support ongoing disinflation and carefully evaluate the effects of U.S. trade tariffs on inflationary pressures. Despite inflation cooling for the third straight month to 22.2%, concerns remain due to slight increases in food and core inflation, prompting the Monetary Policy Committee to maintain a cautious stance. The Nigerian naira has appreciated by about 3% against the U.S. dollar, bolstered by improved foreign exchange liquidity and tighter monetary conditions, yet the central bank remains wary of rising system liquidity driven by increased public revenues. Economists and market watchers largely predicted this hold, expecting the bank to wait for more favorable inflation data before considering any rate cuts. Governor Olayemi Cardoso emphasized the need for continued monetary discipline to anchor inflation expectations amidst mixed economic signals. The Reserve Bank of Australia also maintained its cash rate at 3.85%, reflecting a similar cautious approach amid unclear inflation dynamics.