CBN Cuts Interest Rate to 23%: What It Means for Nigerians Seeking Bank Loans
- CBN cut the Monetary Policy Rate by 350 basis points to 23%, its lowest level since February 2024
- Manufacturers warn the rate cut may have little impact while commercial lending rates remain around 27% to 30%
- LCCI says affordable credit depends on banks passing on the cut, with loan pricing still shaped by borrower risks
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Pascal Oparada is a journalist with Legit.ng, covering technology, energy, stocks, investment, and the economy for over a decade.
Nigerians hoping for cheaper bank loans following the Central Bank of Nigeria’s latest interest rate cut may have to wait longer, as commercial lending rates remain elevated.
The CBN’s Monetary Policy Committee recently reset the Monetary Policy Rate (MPR) to 23% from 26.5%, a reduction of 350 basis points. The decision took the benchmark to its lowest level since February 2024.
Source: UGC
However, manufacturers and other businesses say the real benefit will depend on whether commercial banks respond by reducing the rates charged on loans.
Why CBN cut interest rate
CBN Governor Olayemi Cardoso described the adjustment as a reset and recalibration aimed at improving the effectiveness of monetary policy rather than simply signalling a dramatic shift towards cheaper money.
The apex bank also retained the Cash Reserve Requirement for deposit money banks at 45% and merchant banks at 16%. The Standing Facilities Corridor was recalibrated to +50/-300 basis points around the new 23% MPR.
The changes are designed to bring the policy framework closer to prevailing financial-market conditions and improve the transmission of monetary policy.
Manufacturers want cheaper bank loans
For Nigerian businesses, however, attention has shifted from the CBN's benchmark rate to what banks actually charge customers.
The Manufacturers Association of Nigeria welcomed the reduction but warned that its impact could remain limited if lending rates stay around 27% to 30%.
MAN Director-General Segun Ajayi-Kadir said manufacturers were particularly concerned about the actual interest rates they pay when approaching banks for credit.
High borrowing costs can make it more expensive for manufacturers to finance raw materials, inventories, machinery and expansion, potentially feeding into production costs.
LCCI wants rate cut passed to businesses
The Lagos Chamber of Commerce and Industry expressed similar concerns, saying the crucial issue is whether the lower MPR translates into affordable loans and greater access to credit, particularly for small and medium-sized businesses, according to a report by Daily Sun.
The chamber noted that banks also consider borrowers’ cash flow, collateral, credit history and sector risks when pricing loans, meaning an MPR reduction does not automatically produce an equivalent decline in lending rates.
Source: Getty Images
For Nigerians seeking credit, therefore, the real test will be what happens at commercial banks.
Until lending rates begin to fall meaningfully, individuals and businesses could continue facing expensive loans despite the CBN’s substantial reduction in its benchmark interest rate.
Experts predict new FX rate after CBN lowers MPR
Legit.ng earlier reported that the naira may depreciate following the Central Bank of Nigeria’s (CBN) 350-basis-point cut in its Monetary Policy Rate (MPR) to 23%, according to Bismarck Rewane, Managing Director of Financial Derivatives Company.
Rewane said the lower interest rate could reduce returns on naira assets and put pressure on the currency.
Source: Legit.ng
