IIARD International Institute of Academic Research and Development

IIARD INTERNATIONAL JOURNAL OF BANKING AND FINANCE RESEARCH (IJBFR )

E-ISSN 2695-1886
P-ISSN 2672-4979
VOL. 6 NO. 2 2020

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Impact of Monetary Policy on Price Stability in Nigeria

Takon, S. M. & Ita, R. I.

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Abstract

The study examined the effect of monetary policy on price stability in Nigeria. The objectives were to; examine the effects of money supply, interest rate, exchange rate on price stability. Exploratory research design was employed. Secondary data were extracted and used from CBN Bulletin. Ordinary least square of multiple regression statistical technique was adopted to establish the relationship between the variables. The study covered the period between 2007 to 2016.The analysis results revealed that there was a significant relationship between money supply and inflation, and there was no significant relationship between interest rate and inflation. Exchange rate significantly affects the level of inflation. The study recommended that more emphasis should be placed on money supply; hence, it has much influence in controlling inflationary pressure in Nigeria. Therefore, government should ensure that money supply is just sufficient to stimulate non-inflationary sustainable economic growth. Also, the Central Bank of Nigeria should advise banks to obtain clearance from the presidency through the Ministry of Finance before adjustment of exchange rate.

keywords:

Monetary policy, Price stability, Money supply, Interest rate, Exchange rate

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