The Central Bank of Nigeria (CBN) conducted a survey showing that only 36.3% of Nigerians support increasing interest rates to control inflation which Reveals Nigerians’ Mixed Reactions to Interest Rates. This survpart of the July 2024 Inflation Attitudes Survey (IAS), took place from July 22 to 26, 2024.
Many Nigerians Favor Lower Interest Rates
The survey shows that 50.6% of respondents prefer lowering interest rates despite rising inflation. This preference presents a challenge for the CBN’s Monetary Policy Committee (MPC). They must balance controlling inflation with the public’s demand for more affordable borrowing rates. 13.1% of respondents were undecided.
Dissatisfaction with Interest Rate Management
The survey reveals significant dissatisfaction with how interest rates are managed. About 63.0% of respondents feel dissatisfied, with 42.0% being very dissatisfied. Many believe current policies do not address their economic concerns effectively. Only 15.7% expressed satisfaction with the existing policies.
Rising Prices Concern Nigerians
Regarding the impact of rising prices, 80.9% of respondents think that continued price increases will weaken the economy. 3.2% believe the economy will strengthen, while 12.9% think it will make no difference.
Views on Interest Rates and Inflation
The survey explored views on the link between interest rates and inflation. 53.3% of respondents believe increasing interest rates will lead to higher prices in the short term. 49.8% think this will happen in the medium term (six to twelve months).
Key Insights
The survey’s results come as many Nigerians prepare for challenging months ahead. High inflation has led many to rely on borrowing and depleting savings. In the first quarter of this year, Nigerians borrowed about N4.82 trillion from banks.
Recent Interest Rate Hikes Under Yemi Cardoso
Under Yemi Cardoso’s leadership, the CBN’s MPC has raised interest rates four times. The first increase raised the rate from 18.75% to 22.75%. Subsequent hikes raised it to 24.75%, 26.25%, and most recently, 26.75% in July 2024.
These hikes, totaling 800 basis points, aim to address persistent inflation. Despite these increases, Nigeria’s headline inflation rate fell to 33.40% in July 2024 from 34.19% in June 2024. This drop is the first since December 2022.
Conclusion on CBN Survey Reveals Nigerians’ Mixed Reactions to Interest Rates
The CBN’s July 2024 Inflation Attitudes Survey highlights the complex relationship between interest rates, inflation, and public sentiment in Nigeria. While many Nigerians prefer lower rates, there is considerable dissatisfaction with current policies. As economic conditions evolve, the CBN will face critical decisions on monetary policy.
