Nigerians prefer rate cut over further tightening — CBN

The Central Bank of Nigeria (CBN) has revealed that 63.3 per cent of Nigerians favour a reduction in interest rates ahead of the Monetary Policy Committee (MPC) meeting scheduled for May 19 and 20, 2026.

This was disclosed in the bank’s April 2026 Inflation Expectations Survey Report, published by its Statistics Department under the Economic Policy Directorate.

According to the report, the majority of respondents support lower borrowing costs despite persistent inflationary pressures. It also indicated strong public engagement with the CBN, with 92.1 per cent of respondents following its communications and 93.3 per cent expressing confidence in its transparency.

While 63.3 per cent advocated a rate cut, 26.0 per cent preferred that rates remain unchanged, and 10.7 per cent supported further tightening.

The findings come as the MPC prepares to decide on the Monetary Policy Rate amid concerns over inflation, exchange rate volatility, insecurity, and rising energy costs.

The survey showed that inflation perception worsened in April, with 67.2 per cent of respondents describing inflation as high, compared to 56.4 per cent in March. The CBN placed the Inflation Perception Index at 40.5 points, indicating that price pressures remain elevated.

Households expressed greater concern about inflation than businesses. The proportion of households that perceived inflation as high rose from 61.7 per cent in March to 68.8 per cent in April, while business respondents increased from 51.9 per cent to 65.9 per cent.

By business size, micro enterprises recorded the highest inflation perception at 69.9 per cent, while medium-sized firms reported the lowest at 63.2 per cent.

Income disparities were also evident. Households earning below N70,000 monthly recorded the highest inflation concern at 77.9 per cent, whereas those earning between N250,001 and N350,000 reported the lowest at 46.6 per cent.

Rural respondents were more affected, with 70.4 per cent reporting high inflation compared to 67.6 per cent of urban dwellers.

Participants identified energy costs, transportation, exchange rate pressures, insecurity, and infrastructure challenges as the key drivers of rising prices.

Despite current concerns, many respondents expressed cautious optimism that inflation may ease in the coming months. However, 58.5 per cent expect prices to rise next month, while 56.7 per cent and 54.4 per cent anticipate increases over the next three and six months, respectively. The proportion expecting inflation to decline rose gradually to 20.4 per cent over a six-month outlook.

On spending, 67.9 per cent of respondents expect their expenditure to increase in the current month, with businesses slightly more optimistic than households.

The survey sampled 3,587 respondents, including 1,923 firms and 1,664 households, drawn from frames provided by the National Bureau of Statistics and the National Population Commission.

Commenting on the outlook, economist Muda Yusuf, Chief Executive Officer of the Centre for the Promotion of Private Enterprise, said the MPC may maintain its current tight stance due to inflationary pressures and rising liquidity ahead of the 2027 elections.

He warned that further rate hikes could weaken economic growth, restrict credit expansion, and dampen private sector investment, noting that Nigeria’s inflation is largely driven by structural and supply-side factors rather than excess demand.

Analysts at United Capital Plc also projected that the MPC would likely retain current policy rates, citing the need to balance inflation control with economic growth.

They noted that global tensions, particularly the United States-Iran crisis, have heightened inflation risks through rising oil prices and logistics costs. However, they argued that further tightening may be less effective given the supply-driven nature of inflation.

The firm added that weakening economic activity, reflected in Nigeria’s Purchasing Managers’ Index slipping to 49.4 points in April, could warrant a cautious approach.

United Capital projected that the MPC would retain the Monetary Policy Rate at 26.5 per cent, maintain the Cash Reserve Ratio at 45 per cent, and keep the liquidity ratio at 30 per cent, while possibly adjusting reserve requirements on certain public sector deposits.