---
title: "Nigeria to Raise Benchmark Rate Until Gap With Inflation Closes"
description: "Nigeria plans to continue hiking its benchmark interest rate until it closes the gap with accelerating inflation in Africa’s largest economy."
type: "NewsArticle"
publisher: "Daily Maverick"
site: "https://www.dailymaverick.co.za"
section: "Business Maverick"
author: "Bloomberg"
author_url: "https://www.dailymaverick.co.za/author/bloomberg/"
canonical_url: "https://www.dailymaverick.co.za/article/2022-11-23-nigeria-to-raise-benchmark-rate-until-gap-with-inflation-closes/"
published: "2022-11-23T18:10:18"
lang: "en-ZA"
word_count: 254
---

# Nigeria to Raise Benchmark Rate Until Gap With Inflation Closes

> Nigeria plans to continue hiking its benchmark interest rate until it closes the gap with accelerating inflation in Africa’s largest economy.

By Bloomberg · Published 23 November 2022, 20:10 SAST

## Content

The nation’s central bank raised rates for the fourth time in a row to 16.5% from 15.5% on Tuesday in a bid tame inflation, which rose to a 17-year high of 21.1% in October.

[Nigeria Aims to Tame Prices With Bigger-Than-Forecast Rate Hike](https://www.bloomberg.com/news/articles/2022-11-22/nigeria-increases-rates-by-more-than-expected-to-curb-inflation)

The central bank remains concerned about the 460 basis-point gap between the two, resulting in negative real interest rates, Hassan Mahmud, director in the monetary policy department at the central bank, said at a briefing in Abuja, the capital. Inflation is more than twice the central bank’s 9% target.

“For as long as that gap is wider and negative, it discourages investments, particularly within the domestic economy,” Mahmud said.

Higher inflation means that yields on both short- and long-term domestic debt are negative in real terms. Nigeria sold 200 billion naira ($500 million) of 364-day bills on Wednesday at a yield of 14.84%, about 166 basis points below the benchmark rate, while the average yield of government bonds closed at 14.36% on Tuesday, according to Lagos based ARM Securities.

Mahmud said the central bank would be closely watching how its tightening policy has impacted employment, the balance of payments, external reserves and third-quarter GDP growth, which will be announced on Thursday. He said he expects the central bank to start easing once it sees the inflation “coming down below 15%, narrowing down to 12%.”

Once the inflation numbers start going down, “we expect growth to start recovering, and then we’ll start seeing supply meeting up with the aggregate demand,” Mahmud said.