Nigeria’s central bank hiked its benchmark interest rate for the sixth time this year on Tuesday, citing inflationary and currency rate pressures in Africa’s most populous nation.

The Monetary Policy Rate was raised by 25 basis points to 27.50%, bringing the year’s total rises to 875 basis points. On Tuesday, most Reuters economists projected additional policy tightening.

In October, inflation increased for the second consecutive month to 33.88% in annual terms (NGCPIY=ECI), starting a new chapter in the nation’s most severe cost-of-living crisis in decades.

Olayemi Cardoso, governor of the Central Bank of Nigeria, stated that prolonged pressure on the naira currency was concerning and that food and energy costs were major causes of the increase in inflation.

“Members therefore agreed unanimously to remain focused in addressing price developments,” he told a news conference in the capital Abuja.

According to Cardoso, the central bank is dedicated to the “war against inflation” and anticipates that the first quarter of 2025 will see the full impact of its tightening measures.

“It’s also important for people to understand that there’s a time lag between when you implement policies and when they have an impact,” he said.

President Bola Tinubu’s actions to reduce energy and petrol subsidies and weaken the naira last year have increased price pressure.

Although the growth rate is still well behind Tinubu’s objective of 6%, such actions are intended to boost economic growth and strengthen public finances in Africa’s largest oil producer.

Although it did not anticipate rate reduction until the second quarter of next year, Capital Economics stated in a research note following Tuesday’s raise that it believed Nigeria’s tightening cycle was finished.

A stable naira would be essential for controlling inflation, according to Razia Khan of Standard Chartered, and more rises would not be necessary if the central bank was able to achieve currency stability.