Munich Personal RePEc Archive

Impact of Monetary Policy on Inflation Control in Nigeria

Onwachukwu, Chinedu Increase (2014): Impact of Monetary Policy on Inflation Control in Nigeria.

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Abstract

Inflation is a major problem facing Nigeria as a country today. This has led to reduction in the standard of living of Nigerians. The Central Bank of Nigeria (CBN), however, has made efforts to fight it using different policy measures, of which monetary policy is one of them. Thus this paper focuses on the use of monetary policy to check inflation in Nigeria. The study is based on time series data from 1970 to 2010. Employing the method of Ordinary Least Squares (OLS) to estimate the model results, the study found that bank rate, deposit with the central bank, liquidity ratio, and broad money supply are statistically significant in explaining changes in inflation. However, exchange rate was found not to account for significant changes in inflation in Nigeria. The study recommended the need to check the excess reserves of commercial banks, which will help keep money supply at a low level.

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