Banks’ Maximum Lending Rate Drops to 33.16% as CBN Sustains Monetary Policy, Costs of Borrowing Remain High

Nigerian banks' average maximum lending rate dipped to 33.16% in June 2026, a slight easing from May's 34.78%. This moderation occurred as the Central Bank of Nigeria (CBN) maintained its monetary policy stance, keeping the Monetary Policy Rate (MPR) at 26.50% since February. Despite the monthly decline, borrowing costs continue to be substantial.

The latest figures from the CBN reveal that while the average maximum lending rate has decreased, it remains considerably higher than a year prior. In June 2025, the average maximum lending rate stood at 29.51%, indicating a year-on-year increase of 3.65 percentage points. This rate represents the highest interest banks can charge customers and is a key indicator of credit conditions, directly impacting business investment and economic activity.

This recent dip marks only the second notable reduction in lending rates this year. It follows the CBN's February decision to lower the benchmark rate from 27% to 26.50%. However, the banking sector's response has been slow, with the lending rate remaining stagnant at 35.17% from February through April, even after the policy rate cut. This sluggish transmission of monetary policy changes to borrowers has drawn attention from international bodies.

The International Monetary Fund (IMF) has previously highlighted this pattern, describing it as a "rockets-and-feathers" phenomenon. The IMF observed that Nigerian banks tend to adjust lending rates more quickly when monetary policy tightens than when it eases, suggesting a structural aspect to how interest rates are passed on to customers.