CBN RATE CUT MAY EASE BORROWING COSTS

An expert has said the Central Bank of Nigeria’s (CBN) decision to cut its Monetary Policy Rate (MPR) could help ease borrowing costs for businesses and support investment across the economy.

The CBN’s Monetary Policy Committee reduced the MPR by 350 basis points, from 26.5 per cent to 23 per cent, at its September 21–22 meeting. The apex bank described the move as an operational reset aimed at improving the effectiveness of monetary policy transmission.

The reduction has been welcomed by business groups and economic analysts, who said lower policy rates could eventually reduce financing pressures on businesses, particularly small and medium-sized enterprises. The Centre for the Promotion of Private Enterprise said the decision could support investment, production and working capital.

However, analysts cautioned that the reduction in the MPR would not automatically translate into cheaper loans. The Manufacturers Association of Nigeria noted that commercial lending rates remain around 30 per cent in some cases, meaning banks would need to reflect the lower policy rate in their lending rates for businesses to feel the full benefit.

The Lagos Chamber of Commerce and Industry also said the rate cut could improve credit conditions and reduce the cost of funds, but stressed that its impact would depend on how quickly the lower policy rate is transmitted to actual lending rates.

With the CBN maintaining the Cash Reserve Requirement for deposit money banks at 45 per cent, businesses and investors will be watching how commercial banks respond to the new monetary policy position in the coming weeks.