Nigeria's central bank implemented another substantial interest rate hike on Tuesday, responding to a continued rise in inflation, which hit a 28-year high in April.

Central Bank of Nigeria (CBN) Governor Olayemi Cardoso stated that the Monetary Policy Committee (MPC) faced a critical decision: either raise or hold rates while assessing the impact of previous hikes. Ultimately, the MPC opted for an increase to ensure price stability.

The Monetary Policy Rate was elevated by 150 basis points (bps) to 26.25%, marking the third rate increase this year following hikes of 200 bps in March and 400 bps in February.

Governor Cardoso emphasized that the balance of risks indicated a need for further tightening to build on the benefits of previous hikes. Economists had broadly anticipated another hike given the persistent inflation and the highly volatile naira currency.

Inflation soared to 33.69% year-on-year in April, a level unseen since mid-1996. This surge was driven by the government's removal of petrol and electricity subsidies and two devaluations of the naira since President Bola Tinubu assumed office last year.