Morganable Business/Economy
The Monetary Policy Rate, which currently stands at 26.5 per cent, serves as a benchmark for lending rates across the economy
kaNo —
A majority of Nigerians are calling for a reduction in interest rates as the Central Bank of Nigeria prepares to convene its Monetary Policy Committee meeting scheduled for July 20 and 21, 2026.
Findings from the CBN’s June 2026 Inflation Expectations Survey Report show that 61 per cent of respondents favour a cut in the Monetary Policy Rate, reflecting mounting pressure on the apex bank to ease borrowing costs amid persistent economic challenges.
In contrast, 27.8 per cent of respondents prefer that the current rate be retained, while 11.1 per cent support a further increase.
The Monetary Policy Rate, which currently stands at 26.5 per cent, serves as a benchmark for lending rates across the economy.
That February adjustment followed an earlier 50-basis-point cut in September 2025, bringing the rate down from 27.5 per cent.
The modest easing cycle came after a prolonged tightening phase in 2024, during which the Olayemi Cardoso-led committee raised the benchmark rate by a cumulative 875 points.
However, the latest survey indicates growing dissatisfaction with high borrowing costs, particularly among businesses.
Business Operators Demands Low Inrest Rate
“The majority of respondents want CBN to reduce interest rate, a perception driven by business respondents,” the report stated.
Despite a marginal moderation in Nigeria’s official inflation figures in recent months, both households and businesses continue to perceive inflation as high.
The Inflation Perception Index stood at 45 points in June, signalling widespread concern about the cost of living.
Respondents, however, expressed cautious optimism that inflationary pressures could ease, with expectations that the index would drop to 32.2 points in July.
Meanwhile, 21.8 per cent viewed inflation as moderate, down from 22.6 per cent in the previous month, while only 6.9 per cent considered it low.
Households Affected By Inflation
A breakdown of the data shows that households are more affected by inflation than businesses.
Among households, 76 per cent of respondents perceived inflation as high in June, up from 72.8 per cent in May. For businesses, the proportion declined slightly to 67.3 per cent from 68.4 per cent.
Further analysis by business size reveals that micro enterprises bear the brunt of inflationary pressures, with 72.2 per cent reporting high inflation.
Large businesses followed at 69.4 per cent, while medium-sized and small firms recorded 64.5 per cent and 64.3 per cent respectively.
Interestingly, small businesses had the highest share of respondents who viewed inflation as moderate at 26.8 per cent, followed closely by medium-sized firms at 26.5 per cent.
Large businesses and micro enterprises recorded 24.3 per cent and 19.2 per cent respectively.
Among respondents earning below N70,000 monthly, 80.2 per cent reported high inflation, the highest across all income categories.
This was followed by 75.3 per cent of respondents earning between N70,000 and N150,000, 75 per cent among those earning between N250,001 and N350,000, and 74 per cent among households earning between N150,001 and N250,000.
Respondents earning between N350,001 and N450,000 recorded a slightly lower perception rate of 68 per cent.
In contrast, households earning above N450,000 monthly reported the lowest perception of high inflation at 58.8 per cent.
“Across income categories, households earning below N70,000 reported the highest inflation perception, whereas respondents earning above N450,000 reported the lowest perception of high inflation in the review month,” the report noted.
Geographical differences were also evident, with inflation felt more acutely in rural areas than in urban centres.
The survey showed that 76.4 per cent of rural households perceived inflation as high, compared to 63.2 per cent of urban households.
Respondents identified energy costs, insecurity, interest rates and exchange rate fluctuations as the primary drivers of inflation.
Among businesses, energy costs ranked highest, with 76.3 per cent of respondents citing it as a major factor.
This was followed by insecurity at 72.8 per cent, interest rates at 70.5 per cent and exchange rate movements at 68.6 per cent.
For households, interest rates emerged as the most significant driver at 72 per cent, followed by transportation costs at 66.4 per cent, energy at 63.3 per cent, exchange rate fluctuations at 59.4 per cent and insecurity at 58.7 per cent.
The report noted that factors such as raw materials, household purchases and the activities of middlemen were perceived as less significant contributors to overall inflation during the review period.
Although most respondents expect inflation to continue rising in the short term, there are signs of improving confidence over the medium term.
56.5% Nigerians Anticipate Increase In Inflation
About 56.5 per cent of respondents anticipate an increase in inflation over the next month, while 34.3 per cent expect it to remain unchanged and 9.2 per cent foresee a decline.
Over a three-month horizon, 57.4 per cent expect inflation to rise, 29 per cent foresee no change and 13.5 per cent anticipate a decrease.
Looking further ahead to six months, 55.2 per cent still expect inflation to increase, but the proportion predicting a decline rises to 20.1 per cent.
Businesses appear more optimistic than households about a possible easing of inflationary pressures.
Among business respondents, the share expecting inflation to decline rises significantly from 12.2 per cent in the next month to 24.7 per cent over six months.
Among households, the proportion expecting inflation to moderate increases more gradually, from 5.9 per cent in the next month to 14.5 per cent over a six-month period.
The survey also underscores the tangible impact of inflation on spending patterns.
A significant 67.1 per cent of respondents reported an increase in expenditure in June due to rising prices.
Households recorded a slightly higher figure at 67.5 per cent, compared to 66.8 per cent for businesses.
As the MPC prepares to meet, the findings of the survey present a complex policy dilemma for the Central Bank.
While a majority of Nigerians are calling for lower interest rates to ease borrowing costs and support economic activity, inflationary pressures remain elevated, particularly among vulnerable groups.
