Nigeria's central bank has opted to keep its benchmark interest rate unchanged at 27.50%, Governor Olayemi Cardoso announced on Thursday. This decision follows a series of six rate hikes last year, totaling 875 basis points, aimed at curbing inflation.

The Central Bank of Nigeria (CBN) has raised rates by a cumulative 16 percentage points since 2022 to cool decades-high inflation and steady the naira, which has depreciated 70% against the dollar following currency reforms in 2023. The tightening campaign is beginning to yield results, with the currency trading at a narrow range between 1,470 and 1,550 per dollar since early December.

Cardoso has been focused on reducing inflation, which has become a major challenge for Africa's once-largest economy, now the fourth-largest on the continent. Earlier this week, Nigeria's statistics agency reported a revised annual inflation rate of 24.48% for January after a rebasing exercise. The rebasing of the Consumer Price Index (CPI) by the National Bureau of Statistics (NBS) adjusted the weighting of items in the consumption basket to reflect current spending patterns.

The CBN governor noted that the committee took into account the recent rebasing of the CPI, which adjusted the weighting of items in the consumption basket to reflect current spending patterns. This move is seen as a step towards achieving a more accurate representation of the country's inflation rate.

Despite the cautious approach, the road ahead remains unclear. With the next Monetary Policy Committee (MPC) meeting set for May 2025, investors will be keeping a close eye on whether the CBN sticks to its tough stance or starts easing up if inflation cools down further. The decision will have significant implications for the country's economic trajectory and the naira's value against the dollar.

Analysts will be watching closely to see if the CBN's decision will have a ripple effect on the country's economy, particularly in the wake of the revised inflation rate. The central bank's ability to balance inflation control with economic growth will be crucial in the coming months.

In conclusion, the CBN's decision to hold the interest rate steady is a signal of its commitment to managing inflation and stabilizing the economy. As Nigeria navigates the complexities of economic management, the central bank's cautious approach will be closely watched by investors and analysts alike.