Nigeria: Only 5.9% of Nigerians Know How Monetary Policy Rates Are Set - CBN Survey

19 November 2020

The survey could be a gauge of how economically-active Nigerians are.

Only 5.9 per cent of Nigerians know how the country's Monetary Policy Rates (MPR) are set, a quarterly survey by the Central Bank of Nigeria has shown.

The MPR is the interest rate at which the central bank lends to commercial banks, and is primarily used to control money supply in the economy.

This helps to check inflation and reasonably determines how the economy performs. It also influences all other lending rates in the country and is a key instrument investors and businesses use in taking decisions.

The rate is decided by the Monetary Policy Committee monthly.

The CBN survey, titled " Inflation Attitudes Survey Report" is published quarterly. The survey could be a gauge of how economically-active most Nigerians are. It could also indicate how much Nigerians get involved in business activities and how skilled they are in doing so.

According to the report which was published Thursday, a large percentage of the respondents believed the federal government, not the CBN, sets the country's monetary policy rate.

"To assess whether people are aware of the way monetary policy works in Nigeria, respondents were asked if they knew which group of people meet to set Nigeria's monetary policy rate," the report said.

"Responding, 5.9 per cent felt it was the Monetary Policy Committee, 22.7 percent felt it was the Federal Ministry of Finance, 37.0 per cent believed it was the Government, 3.1 per cent felt it was the National Assembly, while 0.8 and 30.4 per cent answered, 'others' and 'do not know', respectively."

However, majority of the respondent (41.1 per cent) were aware that the Central Bank of Nigeria influences the direction of interest rates, while 10.8 per cent stated that it was the ministers that influence the rates. Some 2.9 per cent and 18.4 per cent were, respectively, were of the opinion that civil servants and banks influence the rates, while 26.8 per cent had no idea.

When asked what best describes the independence of the Monetary Policy Committee, 33.0 per cent felt it was influenced by the government, 10.2 per cent felt it was the federal ministry of finance, and 5.5 per cent believed that it was the national assembly, while 14.9 per

cent thought it was not influenced by any arm of government and 36.4 percent had no idea.

Respondents were also asked how satisfied they were with the Central Bank's management of interest rates in Nigeria.

Some 2.8 percent of the respondents 'very satisfied', while 17.0 per cent were 'fairly satisfied'. 15.4 per cent were 'fairly dissatisfied'.

However, 20.0 per cent were 'neither satisfied nor dissatisfied' whereas 17.1 per cent were 'very dissatisfied'. Those who had no opinion accounted for 27.8 per cent of the respondents.

The survey collects the views of households on changes in prices of goods and services in the last 12 months and their expectations of price changes over the next twelve months.

The respondents' opinions were used to further explore the general public's understanding of the country's monetary policy framework.

"This is because inflation expectations and public understanding of what influences them are important parameters for effective monetary policy formulation.

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