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.

Two years after a devastating economic crisis forced it into default, Ghana’s economy is expanding once more, but the effects of a local debt restructuring are threatening its longer-term recovery.

The local bond market was so severely damaged by the reorganisation, which was unprecedented on the African continent, that the government was compelled to rely increasingly on short-term, more expensive Treasury bills and private placements.

Investors are concerned about the reliance on relatively costly short-term finance. Additionally, six experts and investors told Reuters that the sustainability of government debt is further raised by private placements, whose pricing is sometimes opaque.

According to the individuals, the government may have trouble attracting purchasers when it attempts to access local markets for longer-term borrowings the following year.

“There’s little appetite whatsoever to gamble in (government debt) no matter how high or compensatory the rates are,” said Daniel Ankomah, Chief Investment Officer with Accra-based SAS Investment Management.

“It’s a market confidence thing and it’ll take a while alongside the economic recovery. To come back to where we were, we may need a decade or more.”

A further concern is the elections scheduled for December 7, which will choose Ghana’s next president. Investors are suspicious of the leading candidate’s spending pledges and are concerned about the government’s propensity to spend heavily to entice votes.

Despite the agony, Ghana’s finance minister claimed that the bond restructuring had made the debt sustainable again.

“We anticipate re-entering the domestic bond market in 2025, following a two-year hiatus,” it said in written response to Reuters

It further stated that the timetable was normal and that “an improved macroeconomic environment, specifically inflation,” was probably helping.

The IMF also stated that the temporary reliance on T-bills was anticipated and that continued fiscal tightening would reduce funding needs. The IMF’s debt sustainability evaluations calculate the amount of assistance required to get nations back on track.

“These developments are anticipated to enhance confidence in government securities and facilitate a gradual extension of their maturity profile over time,” it said in a statement.

Since domestic pension funds, banks, and people depend on them for funding when outside markets are too costly, governments that restructure debt usually protect them from losses. However, Ghana’s massive national debt prevented such a strategy.