The Central Bank of Nigeria (CBN) recently raised the interest rate by 150 basis points to 26.25% from 24.75%. Customers with outstanding loans will begin to see an increase in interest payments due to CBN’s new monetary policy rate.
Yemi Cardoso, the Governor of the CBN, announced this during a press briefing after the 295th MPC meeting.
Some commercial banks are adjusting their interest rates on loan facilities in response to the prevailing market conditions after a two-day Monetary Policy Committee (MPC) meeting in Abuja.
In a notice to customers, GTCO announced an increase in interest rates on its loan facilities, affecting customers with existing MaxPlus loan facilities. The current interest rate of 27 percent will be raised to 28.5 percent, effective from June 5, 2024.
GTBank expressed gratitude to its customers for their continued patronage while informing them of the upcoming changes in loan terms. Ayokunle Olubunmi, head of financial institutions ratings at Agusto Consulting, highlighted the impact of CBN regulations on banks’ interest rates, emphasizing the connection between interest rates and the CBN’s Monetary Policy Rate.
Olubunmi explained that banks are compelled to raise interest payments when the CBN increases the MPR, attributing recent interest rate adjustments to decisions made by the MPC. Additionally, he pointed out a trend of banks reallocating funds to government securities due to their increasing appeal in the current market environment.
Regarding the impact on customers, Olubunmi noted that higher interest rates would result in increased borrowing costs and potentially lead to decreased credit activity in the economy.
