(Bloomberg) -- A sharp slump in the Nigerian naira since mid-April and 28-year high inflation will likely leave the monetary policy committee with little choice but to hike rates again. 

Of the 12 economists in a Bloomberg survey nine predict a percentage-point hike, two 200 basis-point increase and one no change when Governor Olayemi Cardoso gives the MPC’s decision on Tuesday in the capital, Abuja. The MPC raised rates by 6 percentage points in the first quarter to 24.75% to rein in inflation and stabilize the currency. 

“The committee will likely be watching recent currency volatility and may decide more action is needed,” said Giulia Pellegrin, senior portfolio manager at Allianz Global Investors, which has more €530 billion ($576 billion) under management. “Investors would still like to see some tightening coming out of the next MPC meeting in Nigeria,” she added. 

The depreciation of the currency by 28% against the dollar in the past four weeks “means additional and sizeable rate hikes are needed,” said Yvonne Mhango, Bloomberg Africa economist. 

The slide is the latest bout of volatility since President Bola Tinubu, who marks his first year in office next week, relaxed foreign-exchange controls in June. The unit has declined around 69% against the greenback since then, fanning inflation that quickened to 33.7% last month — more than triple the 9% ceiling of the central bank’s target range.

“We expect another 200-basis-point increase at the Central Bank of Nigeria’s May 21 meeting, with the focus being on large price gains that are likely to come,” said Mhango. “That follows a similar move in March and will help restore price stability and positive real rates,” she said.

Read More: NIGERIA PREVIEW: Big Rate Hike Needed to Halt Naira Depreciation

Investors also want Cardoso to announce more liquidity-tightening measures and introduce greater transparency in the currency market, said Ayodeji Dawodu, director of fixed income for Central and Eastern Europe, Middle East and Africa at BancTrust & Co. “I would say transparency and increased intervention in the official market at market driven levels are what are missing from the CBN,” he said.

“Unfortunately, there is still some concern on the quality of the reserves, particularly when we saw the sizeable decline in April and there were some vague explanations from the central bank,” he said. 

Liquid reserves declined almost 5% last month to $31.38 billion and have recovered slightly to $31.78 billion as of May 16.

Read More:  Cardoso Says Drop in FX Reserves Not Due to Defending Naira

--With assistance from Mpho Hlakudi and Simbarashe Gumbo.

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