Post by Arise News (@arisenews)

The International Monetary Fund (IMF) has revealed that Nigerian banks respond far more quickly to Central Bank of Nigeria (CBN) interest rate hikes than to rate cuts, creating what it describes as a “rockets-and-feathers” effect. According to the IMF’s June 2026 report, a 100-basis-point increase in the Monetary Policy Rate (MPR) can trigger a 175–180 basis point rise in lending rates, while a similar rate cut results in only a modest 25–30 basis point reduction in borrowing costs.

The Fund noted that although recent reforms, including the unification of the foreign exchange market, have improved monetary policy transmission, the process remains incomplete. It urged further reforms to the CBN’s operational framework, liquidity management system and the high Cash Reserve Ratio (CRR), currently set at 45% for deposit money banks.

The findings suggest that even if the CBN begins reducing interest rates in the future, households and businesses may not immediately benefit from cheaper loans. This comes as the apex bank maintains a tight monetary stance to curb inflation and stabilise the economy.

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