Banks yet to lower lending rates nearly a week after CBN’s MPR cut

Nigerian banks have yet to reduce lending rates nearly a week after the Central Bank of Nigeria (CBN) cut the Monetary Policy Rate (MPR) by 350 basis points, raising concerns that borrowers may not immediately benefit from the apex bank’s latest policy adjustment.

CBN Governor Olayemi Cardoso announced on September 22, 2026, that the benchmark interest rate had been reduced from 26.5% to 23%, marking the largest cut in nearly two decades.

In an explanatory note issued after the Monetary Policy Committee (MPC) meeting, the CBN stressed that the adjustment should not be viewed as a conventional monetary policy easing measure but as an operational recalibration aimed at restoring the MPR as the effective benchmark for market interest rates.

According to the apex bank, the previous MPR had become disconnected from prevailing market rates, with the interbank rate trading around 22%, significantly below the official benchmark of 26.5%.

Despite expectations that the move would trigger lower borrowing costs, lending rates across the banking sector remain elevated, ranging from about 20% to as high as 46%, depending on customer risk profiles, funding costs, and individual bank pricing models.

Banks yet to adjust lending rates

Checks by Nairametrics indicate that several lenders are still assessing the implications of the CBN’s decision before making any changes to their loan pricing.

A senior official at Tier 1 Bank, who is not authorised to speak publicly on the matter, said there are currently no plans to revise lending rates.

• “The only thing that could drop for now is the deposit rate on savings accounts that is tied to MPR.”

According to the source, the benchmark savings deposit rate could decline from about 8.1% per annum to 6.9% per annum following the MPR adjustment.

At another Tier 1 bank, a source told Nairametrics that any decision on lending rates would be determined by the bank’s Asset-Liability Committee (ALCO).

• “I believe there are plans to review the lending rates, but decision will be made by the ALCO.”

The ALCO is responsible for managing a bank’s balance sheet, liquidity, profitability, and interest-rate risks, ensuring that lending and funding decisions align with prevailing market conditions.

A source at a Tier 2 Bank said the lender is taking a cautious approach and may wait for further economic clarity before adjusting rates.

• “Stability and sustainability is key for us. We want to make sure there is consistency.”

Similarly, an official of a younger-generation bank said the financial institution is still evaluating the impact of the CBN’s decision.

• “We’re aware of the CBN’s rate cut and, like the rest of the industry, we’re assessing its impact across our books. Nova Bank remains committed to competitive and responsible lending, and any adjustments will be made in line with sound risk management and market conditions.”

Experts call for lower borrowing costs

Economic and financial experts say the CBN’s policy adjustment should ultimately translate into lower borrowing costs for businesses and households.

The Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, said the effectiveness of the policy shift would depend largely on how quickly banks transmit the change to borrowers.

• “The CPPE expects banks to reflect the new monetary policy environment in the pricing of credit. Lending rates on both new and existing facilities should progressively adjust downwards.”

He warned that the broader economic benefits of the decision could be muted if banks fail to reduce lending costs.

• “Without meaningful transmission to borrowers, the impact of the policy adjustment on investment and economic growth would be limited.”

Financial analyst and Chief Executive Officer of Nisela Capital, Dr. Jerry Igwilo, also said borrowers should expect a downward adjustment in lending rates, although the extent would depend on customer risk assessments.

• “Now that the MPR has gone down by 3.5%, the expectation is that interest on most loans will come down by 3.5%, depending on your risk valuation. A good customer gets better risk.”

Broader decision

Beyond the benchmark rate cut, the MPC adjusted the asymmetric corridor around the MPR to +50 basis points and -300 basis points.

The Committee also retained the Cash Reserve Ratio (CRR) for commercial banks at 45%, maintained the CRR for merchant banks at 16%, and kept the 75% requirement on non-TSA public sector deposits unchanged.

The 350-basis-point reduction represents the largest cut in the benchmark rate since December 2006, when the CBN reduced the MPR by 400 basis points from 14% to 10%. A further 200-basis-point cut followed in June 2007.

The decision came after the MPC retained the benchmark rate at 26.5% during its July 2026 meeting, before opting for a significant reset in September to align the policy rate more closely with prevailing market conditions.