Nigerians wouldn’t mind rising inflation if interest rates are kept low, CBN survey

Nigerians say they would not mind rising inflation if interest rates are kept low, according to the Central Bank of Nigeria Inflation Attitudes Survey (AIS) report for the period ended Q2 2018.

According to the CBN, most respondents, when asked if given a trade-off between inflation and interest rates, prefer interest rates to fall while inflation rate rises.

“Majority of the respondents are of the view that it would be best for the Nigerian economy if interest rates went down,” the regulator said, adding that they are aware the CBN influences the direction of interest rates to control inflation.

Specifically, the respondents were asked whether it would be best for the Nigerian

economy for interest rates to rise or fall. The results showed that 37.2 percent indicated that it would be best for the Nigerian economy if interest rates fell, while 12.8 percent opted for higher interest rates.

“The results further revealed that 13.2 percent thought that it would make no difference, while 35.0 had no idea. These responses revealed that most of the respondents favored lower interest rates for the Nigerian economy.”

However, the respondents believe that that the economy would end up weaker if prices start to rise faster than they do now.

To this end, they suggest considerable support for price stability, as close to half (49.7 percent) agreed that the economy will end up weaker, consistent with the notion that inflation constrains economic growth.

When asked how prices have changed over the past 12 months, respondents gave a median answer of 4.3 percent. Of the total respondents, 18.2 per cent thought prices had gone down or not changed, 58.0 per cent felt that prices had risen by at least 3.0 per cent, while 17.5 percent felt that prices inched up by more than 1.0 percent, but less than 3.0 percent.

The CBN said, aside from its price and monetary stability mandate, is also has the task of building public confidence and support for sustainable economic development and public understanding of the monetary policy committee’s roles.

This is why since June 2009, its statistics department conducts the inflation attitudes survey on quarterly basis, to sample the views of households on how they view the price changes of goods and services in the last twelve months, and their expectations of price changes over the next twelve months.

“Respondents’ opinions were used to explore the general public’s understanding of monetary policy framework. This is because inflation expectations and public understanding of what influences them are important parameters for successful monetary policy formulation,” the CBN said.