When there is a potent monetary policy instrument, it is expected that contractionary monetary policy shocks should be able to reduce inflationary pressure bongabonga, 2017. Pdf the impact of fiscal policy on inflation in nigeria. The role of central banks in macroeconomic and financial stability bis. Given the number of years the central bank had been in existence and of numerous monetary policy measures, one will expect that domestic price could have been relatively stable. 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. This paper posits that monetary policy formulation may concentrate more on the use of treasury bill as an instrument of inflationtargeting in nigeria. Inflation, exchange rate and efficacy of monetary policy. These are the major external factor contributing to nigerias inflation. Though nigeria inflation rate fluctuated substantially in recent years, it tended to decrease through 1969 2018 period ending at 12. Inflation in emerging and developing economies open knowledge. Monetary policy effectiveness, output growth and inflation in nigeria.
Babajide, isibor areghan akhanolu and okafor tochukwu. The effect of inflation and interest rate on economic. Impact of monetary policy on inflation control in nigeria munich. In economics, inflation is a sustained increase in the general price level of goods and services.
The central bank of nigeria is the apex monetary authority that formulates and implements monetary policy in nigeria aim at achieving stable price. The effectiveness of monetary policy in the control of inflation in. Pdf this study examines the effectiveness of monetary policy in controlling inflation in the nigerian economy using a datarich. Data was collected from cbn statistical bulletin for the period 1970 2009. Nigerias inflation rate increases in november vanguard news. Inflation, money supply, exchange rate, monetary policy rate. Impact of monetary policy on inflation control in nigeria. The impact of fiscal policy on inflation in nigeria. Recent journal of monetary economics articles elsevier. It is the demand side economic policy implemented by the government to achieve macroeconomic objectives like growth, consumption, liquidity and inflation.
The effect of inflation and interest rate on economic growth of nigeria abstractthe gross domestic product growth is a long term rise in the capacity to supply increasingly diverse economic goods o its population. This growing capacity is said to base on advancing technology. Central bank of nigeria shortterm monetary policy framework in nigeria before 2002, the central bank of nigeria had designed monetary policy in line with fiscal duration of one year monetary policy had always faced the problem of non committal to both intermediate and ultimate targets the optimal longterm policy was not consistent. The dynamics of monetary policy and inflation in nigeria. The implication of the analysis is that discretionary monetary policy inflation.
The study examined the efficancy of monetary policy in controlling inflation in nigeria. The nigeria economy has experienced robust gdp growth rates over the reform. Effect of monetary policy in nigeria 5936 words bartleby. Download this complete banking and finance project material titled. At its 2021 march monetary policy meeting, nine of the 10 members of the monetary policy committee mpc of the central bank of nigeria cbn decided to leave the monetary policy rate and all other monetary policy mechanisms unchanged, meeting market expectations. They were downloaded from the fred database at the federal reserve. The causes of persistent inflation in nigeria victor o. Although several people, producers, consumers, professionals, nonprofessionals, trade unionists, workers and the likes, talk frequently about inflation particularly if the situation has assumed unemployment and inflation in nigeria 20 2. The article examines the nature of fiscal policies in nigeria using vector autoregression var model.
Nigerias inflation has been higher than the average for african and subsaharan countries for years now, and even exceeded 16 percent in 2017 and a real, significant decrease is nowhere in. Monetary policy and inflation in nigeria economy cbn, free undergraduate project topics, research materials, education project topics, economics project topics, computer science project topics, hire a data analyst. Designing an effective monetary policy for nigeria. Inflation, exchange rate and efficacy of monetary policy in nigeria. Pdf monetary policy, inflation and economic growth in. Free subscription get the hottest stories from the largest news site in nigeria. An alternative approach to measuring current monetary inflation pdf.
Therefore, the current monetary policy in nigeria kills jobs by squeezing. The coefficient of inflation rate appear with the right negative sign and. The trend between inflation and economic growth in nigeria the facts and figures obtained from the imf world economic outlook report 2011 revealed that the nigerias gdp tends to be low when the inflation rates are high apart from a few years of the 80s. Some researchers argued that, monetary policy is an effective policy measure to achieve inflation targeting, these researchers include gbadebo and muhammed 2015, herberger 1978, mccallum and nelson 2010, graude and polan 2005.
Director, monetary policy department, central bank of. This study was carried out to evaluate inflation accounting and control through monetary policy measures in nigeria from 1973 to 2010. Ogbonna inflation, exchange rate and efficacy of monetary policy in nigeria. Monetary policy and inflation control in nigeria gbadebo, adedeji daniel mohammed, nuhu. The main purpose of this study is to empirically examine the effectiveness of monetary policy in controlling inflation in nigeria. Dollarization, inflation and interest rate in nigeria. This page provides nigeria inflation rate actual values, historical data, forecast. Enahoro department of accounting, babcock university, ilishan, nigeria. For that indicator, central bank of nigeria provides data for nigeria from january 1996 to february 2020. It is only through an effective economic system that human and material resources of the nation could.
When they opt for the expansionary policy, the amount of money in circulation increases. The effect of inflation and interest rate on economic growth of nigeria with abstract, chapter 15, references and questionnaire. This has led to reduction in the standard of living of nigerians. In conclusion, studies on dollarization in nigeria remain scanty. We have scoured all the available researcesh so that you wont have to. The impact of inflation on unemployment in nigeria 200120. Monetary policy and its effectiveness on economic development in nigeria author akinjare victoria, a. The dynamics of monetary policy and inflation in nigeria doi. School of accounting, economics and finance, university of kwazulunatal, south africa and. The study set three major objectives which include determine the relationship between economic growth, inflation and unemployment.
Thus this paper focuses on the use of monetary policy to check inflation in nigeria. Learn more about the nigeria economy, including the population of nigeria, gdp, facts, trade, business, inflation and other data and analysis on its economy from the index of economic freedom. The average value for nigeria during that period was 12. Annual time series data, sourced from central bank of nigeria cbn statistical bulletins 19852012 were used to analyze and estimate the three multiple regression models drawn up, with the aid of software package for social sciences spss. At its 2223 july meeting, the monetary policy committee mpc of the central bank of nigeria cbn unanimously decided to leave the monetary policy rate as well as all other monetary policy parameters unchanged, in line with market expectations. Nigeria, sierra leone and the gambia until 1957 when ghana opted out. In the model specified, inflation is the regress and while cash reserved requirement, liquidity ratio, money supply, minimum rediscount rate and interest rate are the regressor. There has been fluctuations in nigerias inflation rate for decades rising as high as 47. Based on the findings, the study concluded that inflation is a significant and viable monetary policy instrument that affects economic growth in nigeria and could be used by monetary authority in.
Citescore values are based on citation counts in a given year e. The national bureau of statistics nbs, says the consumer price index cpi, which measured inflation increased to 11. But the policy measures failed as the prices of goods and the profits of. Operational performance of fiscal and monetary policies in nigerian financial institutions john a. Waec gce past questions and answers free download pdf. Pdf this study examined the effectiveness of monetary policy and control of inflation in nigeria. Inflation is a major problem facing nigeria as a country today. Our model passes the entire tests and is free from. The effectiveness of monetary policy in controlling inflation in nigeria with abstract, chapter 15, references and questionnaire. Fiscal policy, public debt and monetary policy in emerging. Inflation is a household word in many market oriented economies.
Nigeria inflation, annual percent change in the cpi. Effectiveness of monetary policy on inflation targeting in. Inflation, annual percent change in the cpi in nigeria, february, 2020. Monetary policy involves the management of money, the supply of money and interest rate. The efficacy of monetary policy as an instrument for. Secondary data were used empirically to do the assessment. Monetary policy series is available to the general public free of charge. In 2002 in order to free monetary policy implementation from the problem of timeinconsistency and. Inflation targeting regime in nigeria the story thus far. Moreover, the response of inflationary expectations to monetary policy can. An empirical analysis fatukasi bayo department of economics adekunle ajasin university, akungbaakoko abstract this study investigates the determinants of inflation in nigeria between 1981 and 2003. Inflation is the increase in the prices of goods and services which is caused by a variety of factors. Monetary policy and its inflationary pressure in pakistan. Monetary policy refers to the combination of measures designed to control the supply of money.
Inflation as measured by the consumer price index reflects the annual percentage change in the cost to the average consumer of acquiring a basket of goods and services that may be fixed or changed at specified intervals, such as yearly. Monetary policy, inflation and economic growth in nigeria. Monetary policy instruments, target and goals 6 list of figures figure 1. Economic outlook 3 contents theme 1 oil prices still lower for longer theme 2 economy growth gets a boost from high oil prices theme 3 inflation declines sharply, driven mainly by base effects theme 4 monetary policy rate set to fall, and then rise theme. In 2008, the inflation rate reverted to double digit 11. It must be noted that the private sector creates the most jobs in a free market economic system. Fiscalmonetary policy and economic growth in nigeria. In nigeria, the monetary policy is the macroeconomic policy laid down by the central bank of nigeria. Inflation as measured by the consumer price index reflects the annual percentage change in the cost to the average consumer of acquiring a basket of goods and services that may be fixed or changed at. Effectiveness of monetary policy in controlling inflation. Though nigeria inflation rate fluctuated substantially in recent years, it tended to increase through 1999 2018 period ending at 12.
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