The Centre for the Promotion of Private Enterprise (CPPE) has urged Nigerian banks to reduce lending rates following the Central Bank of Nigeria’s (CBN) 350-basis-point cut in the Monetary Policy Rate (MPR), saying the adjustment should translate into lower borrowing costs for businesses.

In a statement signed by its CEO, Dr Muda Yusuf, on Tuesday, the CPPE said the decision was particularly positive for the real sector, where high financing costs have constrained investment, production, working capital and job creation.

The organisation said the rate cut could reduce the cost of capital, improve business cash flows and support investment across manufacturing, agriculture, construction, logistics and other sectors with long investment cycles and tight margins.

However, it stressed that the impact would depend on how quickly banks reflect the new monetary policy environment in their lending terms.

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CPPE urges banks to cut lending rates

The organisation said the MPR adjustment could improve business cash flows and support productive activity, particularly in sectors facing high financing costs.

It added that following the CBN’s rate cut, banks are expected to lower their lending rates.

  • “The CPPE expects banks to reflect the new monetary policy environment in the pricing of credit. Lending rates on both new and existing facilities should progressively adjust downwards,” the statement said.
  • “Without meaningful transmission to borrowers, the impact of the policy adjustment on investment and economic growth would be limited.”

CBN makes biggest rate cut since 2006

Nairametrics earlier reported that theCBN reduced the MPR by 350 basis points to 23% following the 307th meeting of the Monetary Policy Committee (MPC) in Abuja.

  • The committee also adjusted the corridor around the MPR to +50 basis points and -300 basis points, while retaining the Cash Reserve Requirement (CRR) for commercial banks at 45%.
  • The CRR for merchant banks remained at 16%, while the 75% requirement on non-TSA public sector deposits was also maintained.
  • The 350-basis-point reduction is the largest cut in the benchmark rate since December 2006, when the CBN lowered the rate by 400 basis points, from 14% to 10%.
  • The CBN followed with another 200-basis-point reduction in June 2007.

The latest decision followed the MPC’s July 2026 meeting, when the benchmark rate was retained at 26.5%.

Bank lending rates key to rate cut impact

The CPPE’s call centres on the transmission of monetary policy: whether a lower benchmark rate leads to reduced borrowing costs for businesses and households.

For businesses, lower lending rates could ease financing expenses and support investment and working capital. However, the extent of that relief will depend on how banks adjust the pricing of new and existing loans.

The CPPE’s position is that the rate reduction will have a limited effect on productive activity if commercial lending rates remain high despite the CBN’s policy adjustment.