Majority of Nigerians Demand Lower Interest Rates Amid Economic Strain

A significant 71.4% of Nigerians are advocating for a reduction in interest rates due to rising inflation and economic challenges.
This finding comes from the Central Bank of Nigeria’s (CBN) September 2024 Inflation Expectations Survey (IES), which assessed the opinions of businesses and households nationwide.
Conducted between September 9 and 13, the survey included responses from 1,750 businesses and 1,665 households across 36 states and the Federal Capital Territory. While only 12.5% of respondents favored an increase in rates, 16.1% preferred keeping them unchanged. This overwhelming call for lower rates highlights widespread concerns regarding borrowing costs and their impact on both businesses and household expenditures.
The report noted, “Most of the respondents (71.4 per cent) prefer the CBN to reduce the interest rate, while 12.5 per cent expect the interest rate to be raised. The remaining 16.1 per cent preferred the rates to remain unchanged.”
Inflation remains a pressing issue for many Nigerians, with approximately 58.5% describing the current rate as high. Key drivers of inflation include energy costs, transportation, exchange rates, and insecurity, all of which contribute to the escalating cost of living.
Interestingly, the survey revealed a disparity in inflation perceptions between businesses and households. While small businesses expressed a somewhat less negative outlook, households in urban areas reported a lower inflation index compared to their rural counterparts. Lower-income households, particularly those earning less than N30,000 monthly, were the most affected by rising inflation.
Despite the challenges, there is cautious optimism about the future, with both businesses and households expecting a gradual easing of inflation over the next six months. Businesses, however, displayed a more optimistic outlook compared to households, with expectations continuing to be influenced by energy prices, transportation costs, and exchange rates.
The report highlighted that 62.1% of respondents actively follow CBN communications regarding inflation and interest rates, and 61.8% believe the CBN is transparent in its messaging. Nevertheless, only 50.9% felt that these communications significantly influence inflation expectations.
The CBN, under Governor Yemi Cardoso, has raised the monetary policy rate (MPR) five times to address inflation and stabilize the economy, increasing it from 18.75% to 27.25% as of September 2024. Despite a slight month-to-month decrease in the headline inflation rate, year-on-year comparisons show a significant increase, indicating ongoing inflationary pressures.
The National Bureau of Statistics (NBS) is set to release the Consumer Price Index (CPI) report for September on October 15, 2024, which will provide further insight into the inflation landscape in Nigeria.