Nigeria’s average maximum lending rate declined to 33.16 per cent in June 2026, down from 34.78 per cent recorded in May, according to the latest Money Market Indicators released by the Central Bank of Nigeria (CBN).
The decline came as the CBN maintained its monetary policy pause, keeping the Monetary Policy Rate (MPR) at 26.50 per cent since February. The moderation suggests a slight easing in borrowing costs, although lending rates remain significantly higher than they were a year ago.
The report showed that the average maximum lending rate stood at 29.51 per cent in June 2025. This represents a year-on-year increase of 3.65 percentage points, highlighting the continued high cost of borrowing despite the recent decline.
The maximum lending rate refers to the highest interest rate banks charge customers on loans. It is widely monitored by businesses and investors because it influences borrowing costs, investment decisions and overall economic activity.
Data from the CBN showed that the average maximum lending rate started the year at 32.68 per cent in January before rising sharply to 35.17 per cent in February. The rate remained unchanged through February, March and April before falling to 34.78 per cent in May and 33.16 per cent in June.
The June decline marks the second notable reduction in lending rates this year. It follows the Monetary Policy Committee’s decision in February to reduce the benchmark interest rate from 27 per cent to 26.50 per cent, before maintaining that level in subsequent meetings.
At its meeting last week, the MPC unanimously voted to retain all policy parameters. The committee cited improving exchange rate stability, easing inflationary pressures and the need to protect the economy from external risks.
CBN Governor Olayemi Cardoso said the committee’s decision was based on an assessment of domestic economic conditions and global uncertainties, including concerns over the United States economy and ongoing geopolitical tensions in the Middle East.
Despite the moderation, analysts noted that banks have been slow to pass the benefits of lower policy rates to borrowers.
The International Monetary Fund (IMF) previously described Nigeria’s monetary transmission system as a “rockets-and-feathers” phenomenon. According to the Fund, lending rates rise quickly when the CBN tightens monetary policy but fall only gradually when policy is eased.
The IMF explained that a 100-basis-point increase in the MPR typically raises Treasury bill yields and lending rates by about 175 to 180 basis points. However, a similar reduction in the policy rate lowers lending rates by only 25 to 30 basis points.
The Fund also noted that while interbank rates respond more evenly to policy changes, deposit rates adjust only marginally. This means borrowers and savers experience the benefits of monetary easing more slowly than the impact of policy tightening.
High borrowing costs continue to weigh on manufacturers, small businesses and other private sector operators already facing the effects of foreign exchange reforms, rising energy costs and the removal of petrol subsidies.
However, market analysts expect lending rates to ease further in the coming months if inflation continues to decline, exchange rate stability is maintained and the CBN keeps its current monetary policy stance. They also cautioned that banks may remain conservative in passing lower funding costs to customers.
