According to data from the Central Bank of Nigeria (CBN), only 36.3% of Nigerian households favor higher interest rates as a means of containing inflation.
The CBN’s Statistics Department conducted the July 2024 Inflation Attitudes Survey (IAS), a component of the larger Household Expectations Survey, from July 22 to July 26, 2024, with a 99.7% response rate.
The poll, which included 1,665 homes nationwide, provides insight into the intricate relationships that exist between interest rates, inflation, and public opinion in Nigeria.
50.6% favour reduced rates
Remarkably, the poll revealed that, despite the fact that inflation is still rising, 50.6% of participants would rather see interest rates lowered, with 13.1% remaining unsure.
This gap demonstrates the difficulty the Monetary Policy Committee (MPC) of the CBN faces in striking a balance between the public’s desire for more affordable borrowing rates and the need to reduce inflation.
Although most respondents acknowledged that lowering interest rates could worsen inflationary pressures, they yet showed a desire for lower rates.
This research indicates that Nigerians are becoming increasingly concerned about the expense of living in general and the affordability of loans in particular, as a result of rising costs for basic goods and services.
63% of Nigerians are unhappy with interest rate control in Nigeria
The survey also indicates a strong discontent with the current management of interest rates.
42.0% of respondents said they were extremely dissatisfied with the way interest rates were managed, out of the about 63.0% who said they were not happy with it.
This degree of dissatisfaction suggests that there is a great deal of public unhappiness with the current monetary policy framework, indicating that many Nigerians feel their economic issues are not being adequately addressed by the current interest rate policies.
However, only 15.7% of respondents said they were satisfied with how interest rates were managed, indicating a clear divide between those who approve of the current policies and those who do not.
This low satisfaction rate reflects the general perception that the economic difficulties – especially those associated with high borrowing prices and inflation – are not being sufficiently addressed.
Regarding the perceived effect of price increases, however, 80.9% of respondents said that if prices kept growing quickly, the economy would deteriorate, indicating a general concern about the detrimental consequences of inflation on economic stability.
In such a scenario, a mere 3.2% of respondents predicted the economy would get stronger, while 12.9% said it would have no effect.
The public’s perception of the connection between interest rates and inflation was also explored in the study. In the near term, 53.3% of respondents thought that rising interest rates would result in higher prices; however, 49.8% of respondents thought the same thing about prices in the medium term (six to twelve months).
Although perspectives regarding the precise effects of monetary policy and inflation remain varied, these findings reflect a general knowledge of the complicated interplay between the two.
What to note
As previously reported by The News Chronicles, Nigerians anticipate difficult months ahead, with many preparing to borrow money and spend their savings in order to meet their financial obligations in the face of a difficult economic environment.
Many Nigerians are moaning under the weight of the soaring costs of everything from food to fuel and rent as a result of the rising inflation.
Additionally, it forced Nigerians to take out bank loans of roughly N4.82 trillion from January to March of this year.
The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has raised interest rates four times under Yemi Cardoso’s direction.
The rate was raised by the MPC by 50 basis points to 26.75% in July 2024, following hikes of 18.75% to 22.75%, 24.75%, and 26.25% in the first, second, and third hikes.
The country’s ongoing inflation problems, namely high core and food inflation, have prompted these rises, which have totalled 800 basis points since Cardoso’s inauguration.
According to a recent report by the National Bureau of Statistics (NBS), Nigeria’s headline inflation rate dropped from 34.19% in June 2024 to 33.40% in July 2024, despite the fact that it is still high. The headline inflation rate has not decreased since December 2022, when it last did so, to 21.34%.
