Nigeria’s average maximum lending rate declined to 33.16% in June 2026, down from 34.78% in May, offering a slight reduction in borrowing costs as the Central Bank of Nigeria held its benchmark interest rate steady.
According to the CBN’s latest Money Market Indicators, the moderation occurred while the Monetary Policy Committee kept the Monetary Policy Rate unchanged at 26.5%. The policy rate has remained at this level since February, following a 50-basis-point cut earlier in the year.
Despite the month-on-month drop, lending rates remain elevated compared with a year earlier. The average maximum rate stood at 29.51% in June 2025, representing a year-on-year increase of 3.65 percentage points.
Slow Transmission of Policy Changes
The maximum lending rate, which reflects the highest interest charged by banks on loans, is a key indicator of credit conditions. High rates typically discourage borrowing, investment and business expansion.
The June decline marks only the second meaningful easing this year. The rate began 2026 at 32.68% in January, rose to 35.17% in February and held that level through April, even after the CBN reduced the policy rate. Analysts attribute the lag to slow transmission of monetary policy adjustments by commercial banks to end borrowers.
Policy Stance and Business Concerns
At its most recent meeting, the MPC unanimously retained all monetary policy parameters, citing exchange rate stability, moderating inflation and global uncertainties, including geopolitical tensions in the Middle East and concerns over the US economic outlook.
CBN Governor Olayemi Cardoso said the decision aimed to preserve macroeconomic stability while allowing previous policy measures to continue filtering through the economy.
Businesses, particularly manufacturers and small enterprises, continue to express concern over elevated borrowing costs amid foreign exchange reforms, higher energy prices and rising operating expenses. Data from the Manufacturers Association of Nigeria show that commercial bank credit to the manufacturing sector contracted to N6.61 trillion in December 2025 from N8.53 trillion a year earlier.
The modest easing in maximum lending rates provides limited relief, but the persistently high cost of credit remains a constraint on private sector expansion as the economy navigates ongoing reforms and external pressures.
