The Central Bank of Nigeria’s (CBN) October 2024 Inflation Expectations Survey (IES), has shown that 76 percent of Nigerians are calling for reduction in the interest rates, underscoring the mounting pressure on individuals and businesses as the nation struggles with persisting economic slowdown. According to the survey, people perceived that excessive borrowing costs are exacerbating financial problems in a nation that is already struggling with high unemployment, inflation, and declining purchasing power. The poll, which was carried out in all 36 States of Nigeria as well as the Federal Capital Territory, gathered opinions from 1,750 enterprises and 1,665 households and also revealed information about the country’s economic outlook and inflation perceptions.
This October data represents a 4.6 percent increase from the 71.4% reported in September, indicating that more Nigerians now support a reduction in interest rates. Only 16.5% of respondents were in favor of maintaining the rate at the current level, while just 7.5% were in favor of raising it. The desire for lower interest rates highlights the public’s worries about exorbitant borrowing costs, which they see as a barrier to both business expansion and consumer consumption. An increasing number of people are frustrated by the rising Cost Of Living and seek measures that promote Economic Growth and alleviation.
Monetary policy rate has increased five times in a row.
In an effort to stabilize the Economy and manage inflation, the Monetary Policy Rate (MPR) has increased five times in a row under the direction of Governor of the Central Bank of Nigeria (CBN), Yemi Cardoso. The rate increased by more than 900 basis points, from 18.75% to the current 27.75%, since Cardoso took office in 2023. These changes are a reflection of the CBN’s approach to combating skyrocketing inflation, which peaked in June 2024 at 34.19%, and was made worse by growing food and energy prices. The MPR reached its present level of 27.75% in September 2024 after the unanimous decision of the committee to implement a 50 basis point increase.
For Nigeria, this is a record high, as the total rises under Cardoso’s leadership were among the most severe tightening cycles in recent history. The negative impact these policies have on borrowing costs for individuals, businesses, and the overall economy has raised widespread concerns, regardless of the fact that they are intended to correct macroeconomic imbalances. There is general discontent with the move, as the majority contended that structural problems including poor infrastructure, an excessive reliance on imports, and low Productivity in important sectors are not adequately addressed by the emphasis on monetary tightening.
Many perceive that high interest rates have worsened the economy.
Respondents in the survey cited a number of reasons for their support of lower interest rates, with the most significant of these being the skyrocketing cost of living, which is partly caused by inflation and the naira’s decline in value. Many Nigerians perceived that the CBN’s monetary tightening policy, which included high interest rates, has worsened economic misery rather than reduced inflation. Business owners, particularly small and medium-sized businesses (SMEs), have expressed worries about their inability to obtain reasonably priced credit.
With the country having one of the highest interest rates globally, many entrepreneurs are groaning, unable to obtain loans to maintain or grow their businesses. This has exacerbated the nation’s Unemployment problem by lowering productivity and causing job losses. For the average individual, high interest rates result in more costly loans for necessities like homes, vehicles, or schooling. A decrease in disposable income results from the cumulative effect, which further widens the wealth gap by leaving families with less money for essentials.
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As Nigerians increasingly feel the squeeze of economic pressures, the demand for lower interest rates is a clear signal to policymakers. Critics have noted that Nigeria’s economic problems cannot be resolved by high interest rates alone. They noted that the cost of living will continue to rise and the advantages of monetary tightening will be restricted in the absence of targeted reforms and complementing fiscal actions. While the CBN has insisted that its high interest-rate policy is required to fight inflation, finding a balance that tackles inflation without impairing growth and consumer spending is crucial.