Survey: Households Favour Lower Interest Rate

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Nume Ekeghe

A survey conducted by the Central Bank of Nigeria (CBN) has shown that 37.2 per cent of the respondents indicated that it would be best for the Nigerian economy if interest rate is reduced. The CBN stated this in its “Inflation Attitudes Survey Report,” for the second quarter (Q2) 2018, which was published on its website yesterday.

According to the central bank, the percentage of respondent households who felt that interest rates had risen in the last 12 months rose by 0.8 points to 32.4 points in the current quarter when compared to 31.6 points attained in Q1, 2018.

“The result revealed that more households perceived that interest on bank loans and savings rose over the past 12 months.”

On the expected change in interest rates on bank loans and savings over the next 12 months, more respondents (26.6 per cent) were of the view that the rates will rise, while 15.6 per cent believed that the rates will fall.

A net rise value of 10.9 per cent was recorded compared to 9.4 per cent attained in the previous quarter. About 57.8 per cent of the respondents either expected no change or had no idea.

Similarly, 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 per cent 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 per cent 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,” it added.

Furthermore, respondents in choosing between a lower interest rate and higher inflation opted to a higher interest rate.

It further stated: “Respondents were asked to choose between raising interest rates in order to keep inflation down and keeping interest rates down to allow prices to rise.Responding, 26.3 per cent preferred interest rates to rise in order to keep inflation down compared to 28.0 per cent who said they would prefer prices to rise faster, while 45.6 per cent had no idea.”