Rate cut raises hopes for cheaper business loans
The Central Bank of Nigeria has cut its benchmark interest rate by 350 basis points to 23%, raising hopes for cheaper credit for businesses. Read More: https://punchng.com/rate-cut-raises-hopes-for-cheaper-business-loans/
Nigeria's Central Bank recently reduced its benchmark interest rate by 350 basis points to 23 per cent, marking a significant shift from aggressive monetary tightening. The move aims to bring the policy rate closer to market rates, potentially lowering credit costs for businesses and reducing borrowing expenses for the government.
However, analysts caution that the effectiveness of this change will depend on the responsiveness of bank lending rates, inflation, and the naira. Since April 2026, the Nigerian Overnight Financing Rate has remained near 22 per cent, while the Monetary Policy Rate (MPR) stood at 26.5 per cent. This gap weakened the effectiveness of monetary policy transmission.
The Central Bank's governor, Olayemi Cardoso, emphasized the need to address this disconnect, stating that the 350-basis-point reduction reflects a market adjustment rather than fresh stimulus. Economic indicators suggest improved conditions, with headline inflation falling to 15.39 per cent in August and real GDP expanding by 4.43 per cent in the second quarter.
Despite these positive signals, businesses will need to wait for the impact on lending rates to gauge the full benefits of this policy adjustment.
Written by urgent.news from Punch's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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- Rate cut raises hopes for cheaper business loans punchng.com
