TITLE:
Monetary Policy, Inflation and Economic Growth in Nigeria
AUTHORS:
Titilope Idowu Oladejo, Adegbemi Babatunde Onakoya, Ezekiel Oseni, Joseph Olusegun Ajibola, Ishola Rufus Akintoye
KEYWORDS:
Autoregressive Distributed Lag Model, Economic Growth, Gross Domestic Product, Monetary Policy, Inflation
JOURNAL NAME:
Open Journal of Business and Management,
Vol.13 No.2,
February
17,
2025
ABSTRACT: Inflation remains an important microeconomic variable in gauging the state of the economy. It requires close monitoring by regulators and economy managers to ensure financial stability and economic growth and development. Despite the Central Bank of Nigeria’s efforts to control inflation through monetary policy adjustments, Nigeria has faced persistent challenges with inflation, particularly in food prices. This study investigated the nexus between GDP growth, inflation, and monetary policy in Nigeria, focusing on the effectiveness of the Monetary Policy Rate (MPR) in managing core and food inflation. Using secondary data from the Central Bank of Nigeria and an ex-post facto research design covering the period from 2006 to 2023, the study employed an autoregressive distributed lag model, including an error correction mechanism and cointegration test, to analyze the variables. The results indicated that while an increase in MPR effectively moderated core inflation by reducing demand-pull factors, it had a limited impact on food inflation due to external shocks such as weather and supply chain disruptions. The findings highlighted the need for a comprehensive approach, combining monetary policy with agricultural reforms and regulatory oversight to stabilize prices. Policy recommendations included implementing advanced agricultural technologies, enhancing supply chain logistics, integrating fiscal measures with monetary policy, and promoting market transparency to mitigate opportunistic pricing behaviours.