ABSTRACT

The study investigated the impact ofmonetary policy on the Nigerian economy for the period 1981- 2018 with specific objectives namely: to determine the impact ofmoney supply on Nigerian economy, to determine the impact ofinflation on Nigerian economic growth and to determine the impact of lending Interest on Nigerian economic growth. The specified model was estimated using the Ordinary Least Square with the help ofthe Error Correction Model to determine the level ofimpact that one variable has on the other. While E-vicws 10 statisticalsoftware was employed in computing the result, time series data were obtained from World Bank national accounts data and OECD National Accounts data files and the study established that Lending Interest Rate (LINTR) had a negative relationship with RGDP and wsignificant ar 5% level ofsignificance, Broad Money Supply (LM2) had a positive relationship with RGDP and significant at 5% level ofsignificance and finally Inflation Rate (INFR) had a negative relationshipwith RGDP, andstatistically insignificant at 5% level ofsignificance. Based on the findings, the study recommended that Monetary policies should be used to create afavourable investment climate by facilitating the emergency of market based interest rate and exchange rate regimes that attract both domestic andforeign investments, create jobs, promote non-oil export and revive industries that are currently operation far below installed capacity. In order to strengthen the financialsector. the C entral Bank has to encourage the introduction ofmorefinancial instruments that are flexible enough to meet the risk preferences and sophistication ofoperators in thefinancial sector.