Nigeria's central bank on Tuesday raised its benchmark interest rate for the fourth time this year, as inflation surged to a 28-year high and the naira came under renewed pressure on both the official and parallel markets.

Central Bank of Nigeria Governor Olayemi Cardoso said the rise in the bank's main lending rate to 26.75% from 26.25% was needed to tackle inflation.

"While monetary policy has been moderating aggregate demand, rising food and energy costs continue to exert upward pressure on price development," Cardoso told a press conference.

Tuesday's decision by the bank's Monetary Policy Committee to hike the rate by 50 basis points comes after increases of 150 bps in May, 200 bps in March and 400 bps in February, its largest in around 17 years.

Analysts polled by Reuters had predicted a 50 bps hike, as inflation rose for the 19th straight month in Africa's most populous nation to 34.19% in annual terms in June.

"For now, we think that today's decision marks the final act in this hiking cycle," David Omojomolo, Africa economist at Capital Economics, said.

"But there's clearly a risk that further inflation surprises prompt the (central bank) to tighten monetary conditions further, either through outright rate hikes or by tweaking liquidity provision," he said, adding that rate cuts were unlikely until next year.

Last week, President Bola Tinubu's government agreed to raise the minimum wage to 70,000 naira ($44) a month after asking lawmakers to approve 6.2 trillion naira in additional spending to plug shortfalls in this year's budget, possibly stoking inflation further.

Price pressures have been spurred by Tinubu's administration slashing petrol and electricity subsidies and twice devaluing the local naira currency.

Cardoso has indicated that rates will stay high for as long as needed to bring down inflation.

The International Monetary Fund in May maintained its growth forecast of 3.3% for Nigeria's economy for 2024, up from 2.9% last year, citing a pick up in services and trade sectors.

It has welcomed the central bank's recent rate hikes to curb galloping inflation and called for a data-driven approach to further rate tightening while urging the bank to build up its forex reserves.