CBN survey: Families tight on cash, banks likely to raise rates

By Chinwendu Obienyi

Households across the country remain under financial strain and are increasingly reluctant to commit to major spending, according to the latest survey by the Central Bank of Nigeria (CBN), underscoring weak consumer confidence in Africa’s largest economy.

The February 2026 Household Expectations Survey showed persistent pessimism across key spending categories, with respondents indicating a reduced willingness to allocate income toward big-ticket items such as housing, vehicles, investments, appliances and rent. Negative indices recorded across all periods point to a cautious consumer base grappling with income pressures and elevated borrowing costs.

This sentiment comes as borrowing conditions continue to tighten. A larger share of respondents, 42.7 per cent, said bank lending rates increased over the past three months, while 39.2 per cent expect rates to rise further in the near term.

The outlook reflects the continued impact of monetary tightening aimed at curbing inflation, which has kept credit conditions restrictive.

Despite this, a majority of households favour a shift toward lower borrowing costs. About 63 per cent of respondents expressed a preference for declining interest rates, with nearly half, 48.3 per cent, indicating they would support rate cuts even if it risks fueling inflation.

The findings highlight the growing tension between price stability objectives and the need to stimulate consumption in a fragile economic environment. The data also suggests that high interest rates are compounding affordability challenges for households already contending with elevated living costs.

With limited access to cheaper credit, consumers are scaling back discretionary spending and delaying major financial commitments, a trend that could weigh on broader economic growth.

Parallel findings from the CBN’s Business Expectations Survey reinforce the narrative of a constrained economic environment. Businesses identified high interest rates and bank charges among the most pressing operational challenges, alongside insecurity, multiple taxation and inadequate power supply. Together, these factors continue to pressure both supply and demand dynamics within the economy.

Still, there are signs of cautious optimism among firms. Respondents expect some improvement in macroeconomic conditions, including a gradual appreciation of the naira against the US dollar and a more favourable borrowing outlook in the months ahead.

For households, however, the near-term outlook remains subdued. The combination of rising financing costs and uncertain income prospects is likely to sustain conservative spending behaviour, limiting the pace of recovery in consumer-driven sectors.

The divergence between business expectations and household sentiment underscores the uneven nature of Nigeria’s economic adjustment, as policymakers balance inflation control with the need to support growth.