Empirical analysis of the impact of monetary policy on inflation in Nigeria

Abstract

Based on existing theories, it is generally assumed that monetary policy can be used to regulate inflationary pressures. However, considering the numerous empirical studies that have taken place so far, conflicting evidence is inherent hence the essence of this study is to analyze this conflicting evidence with the aim of finding out the extent to which monetary policy by the Central Bank of Nigeria (CBN) has actually abated inflation in the country considering the continuous increase in the general price level of goods and services.  The investigation relied on previous studies on the subject matter where it was revealed that though monetary policy particularly Open Market Operations (OMO) as a monetary Policy Tool is chief amongst the tools used in controlling inflation in Nigeria, it has really not been very effective. In the end, several recommendations were made accordingly, and the most important and urgent among them is the need for the government to put in more deliberate efforts in controlling imported inflation since Nigeria is an import-oriented nation particularly importation of refined crude, raw materials, industrial and agro-machinery and equipment, manufactured products, agro-allied products etc.