[REVISION HISTORY]

Monetary policy and lending rate shifts in Nigeria

11 recorded revisions of this situation.

What changed

2026-10-25 18:08 UTC → 2026-10-26 19:27 UTC · added ~~removed~~

In Nigeria, banking lending rates have begun to decline following a reduction in the Monetary Policy Rate (MPR). In August 2026, the average maximum lending rate dropped to 29.19 percent from 33.16 percent in July, following a policy rate reduction to 26.50 percent. The International Monetary Fund has characterized Nigeria’s borrowing rate trends as a “rockets-and-feathers” pattern, where rates rise quickly during tightening but fall gradually during easing. On September 22, 2026, the Central Bank of Nigeria (CBN) reduced the benchmark MPR by 350 basis points to 23 percent. Governor Olayemi Cardoso described the move as an “operational reset” to strengthen monetary policy transmission. This shift followed a period of moderating inflation, which fell to 15.39 percent in August. While the Manufacturers Association of Nigeria (MAN) welcomed the cut, industry leaders expressed concern regarding the transmission of lower rates to commercial lending, noting that banks often delay downward adjustments. On September 30, 2026, the CBN directed commercial banks to utilize the ₦4.65 trillion raised during the recent banking sector recapitalisation programme to support productive lending in sectors such as agriculture, manufacturing, and infrastructure. CBN Deputy Governor Dr. Muhammad Sani Abdullahi emphasized that the recapitalisation should serve as a catalyst for economic activity, while Dr. Olubukola Akinwunmi, Director of the Banking Supervision Department, warned that profit-seeking must not lead to regulatory breaches. By late October 2026, the CBN ~~faced increased scrutiny over~~ defended its 75 percent Cash Reserve Ratio (CRR) on non-Treasury Single Account public sector deposits. During the ~~effectiveness~~ ‘CBN Listens Programme’ in Ibadan, Hakama Sidi-Ali, Director of the ~~MPR. While~~ Stakeholder Engagement and Institutional Relations Department, stated the ~~rate was reduced~~ measure is designed to ~~23 percent as inflation dropped~~ manage liquidity and mitigate inflationary pressures. Meanwhile, the banking sector continues to ~~15.4 percent, critics argue~~ navigate structural changes following the ~~benchmark remains a driver~~ recapitalisation exercise. While 33 of ~~high lending costs that challenge MSMEs. President Bola Ahmed Tinubu has expressed frustration with high rates, and Finance Minister Taiwo Oyedele placed responsibility~~ 37 banks met updated requirements by March 2026, analysts continue to question whether increased capital is being converted into productive credit for ~~these costs on~~ the ~~banking sector.~~ broader economy.

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