The Effectiveness Of Monetary Policy In Combating Inflationary Pressure In Nigeria Economy

ABSTRACT

This study focuses mainly on the effectiveness of monetary policy in combating inflationary pressure in Nigeria economy. The study was therefore carried out to examine the monetary policy strategies and inflation situation in Nigeria, the trend in inflation situation and monetary policy strategies, the causes of inflation, the effect of monetary policy in combating inflationary pressure in Nigeria. The area of study of this research work is the Nigeria economy which covers a period of 1984-2012. The work adopted secondary data from Central Bank of Nigeria statistical bulletin, monetary policy ratios, interest rate, cash reserve ratio, inflation rate, textbooks, internet et al. The work adopted the multiple regression analysis for the data analysis and the Pearson correlation test and granger causality test to test the hypothesis. It was observed that the monetary policy rate do granger cause inflation while interest rate and cash reserve ratio does not significant cause increase in inflation. It result indicated shows that there is a positive relationship between interest rate and inflation with a co-efficient 0.104.