Banks are reviewing lending rates for loaned funds after the Central Bank of Nigeria (CBN)-led Monetary Policy Committee (MPC) decision to raise benchmark interest rate from 15.5 per cent to 16.5 per cent, analysts have said.
An economist and financial analyst, Michael Ndidi, said the banks are keeping eyes on their rising cost of funds and operational costs which are impacting on their profitability.
The apex bank had raised the Monetary Policy Rate (MPR) by 100 basis points interest rates during last month’s MPC meeting.
According to Ndidi, the rates hike will also lead local industries to review upwards, cost of products at a time that inflation is also rising, and people’s purchasing power weakening.
He said banks do not waste time in raising lending rates, but find it difficult to increase interest on savings.
“I think the CBN should enforce its policy on interest rates on savings and monitor to ensure banks pay the right interest on deposit to savers,” he added.
Analysts at Cordros Capital said the MPC decision was expected based on the CBN’s commitment to reining in rising inflation.
Cordros Capital noted that the Governor of CBN, Mr. Godiwn Emefiele, had in the last two meetings, maintained that the apex bank would maintain its interest rate hikes until there is a deceleration in the inflation path.
Emefiele had pointed out that “time-tested monetary policy has shown that inflation must lag policy rates”.