CBN Survey Shows Nigerians Prefer Low Interest Rates To High Inflation
The Central Bank of Nigeria, CBN has conducted a survey seeking to find out what Nigerians’ attitude to inflation and interest rates.
It called the survey Attitudes Survey Report and the highlights of it showed that Nigerians believe that the economy would end up weaker if prices start to rise faster.
But given a trade-off between inflation and interest rates, more respondents 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.
While some of the respondents are aware that the CBN influences the direction of interest rates to control inflation, majority have no idea.
The Q3 2018 Inflation Attitudes Survey was conducted during the period September 24 - October 4, 2018 from a sample size of 1,770 Households randomly selected from 207 Enumeration Areas (EAs) across the country, with a response rate of 96.9%.
Respondents were asked what would become of the Nigerian economy if prices started to rise faster than they do now.
The survey result showed that 48.4% of the respondents believed that the economy would end up weaker, 12.1% stated that it would be stronger, 17.7% of the respondents believed it would make a little difference, while 21.6% did not know.
The responses opined considerable support for price stability, as close to half (48.4%) agreed that the economy will end up weaker.
This is consistent with the notion that inflation constrains economic growth.
As far as inflation and interest rates are concerned, it does not matter what the people’s opinions are.
For interest rates to come down, inflation must first fall. And for inflation to fall, the economy must see improved productivity. It is basic economics.
Although the CBN can try to control the amount of money in circulation through tight monetary policy, that’s about the much it can do to drive down inflation.
But for inflation to really go down, the amount of goods and services being produced in the country must increase beyond the amount of money in circulation.
You can read the full CBN survey report HERE.
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