In a recent development, the disparity between the maximum lending rates and savings deposit rates within the banking sector has expanded by a significant 22.14% during the month of July. This news comes from the latest figures released by the Central Bank of Nigeria, shedding light on the financial landscape’s shifting dynamics.
According to the data obtained, the savings deposit rate at various banks witnessed a slight increase from 5.18% in June to 5.24% in July. These rates had previously been at 5.13% in May. The Central Bank’s figures also revealed a minor reduction in the maximum lending rate, which dipped from 28.94% in June to 27.38% in July.
Delving into the details, the Central Bank unveiled that the prime lending rate, a crucial benchmark, showed an upward trend. July saw the rate rise to 13.98%, an increase from the 13.85% noted in June.
Further analysis of the figures showcased various other rates in the money market. Among these were the 12-month, six-month, three-month, and one-month deposit rates, which stood at 7.83%, 8.54%, 7.68%, and 7.15% respectively in July. Additionally, the savings deposit rate, despite its slight increase, remained relatively lower at 5.18%.
Treasury bills rates also experienced an upward shift, rising to 4.45% in July from the 3.87% recorded in June. Meanwhile, the monetary rate reached 18.75%, while the inter-bank call rate settled at 6.73%.
During the latest Monetary Policy Committee meeting held in July, the Acting Governor of the Central Bank, Folashodun Shonubi, highlighted the decisions made. The committee opted to raise the Monetary Policy Rate (MPR) by 25 basis points, pushing it from 18.50% to 18.75%. They also adjusted the asymmetric corridor to +100/-300 basis points around the MPR.
Retaining the Cash Reserve Ratio (CRR) at 32.5% and the Liquidity Ratio at 30%, the committee maintained a cautious stance. Shonubi emphasized the need to support investments that could drive output growth and subsequently aid in the recovery of the economy.
The committee’s decision, as explained by Shonubi, aimed to strike a balance between sustaining efforts to control inflation expectations, narrowing the negative real interest rate gap, and enhancing investor confidence. This moderate rate adjustment was seen as a step towards fostering a stable economic environment.
With the widening gap between lending and savings rates, coupled with the various adjustments and decisions by the Central Bank, the Nigerian financial landscape is in a state of flux, reflecting efforts to navigate economic challenges while fostering growth.