However, there have been various regimes of monetary policy in nigeria. The goals of monetary policy refer to its objectives such as reasonable price stability, high employment and faster rate of economic growth. Central bank of nigeria, monetary policy department. Evolution of the monetary policy framework in nigeria. A monetary policy is a process undertaken by the government, central bank or currency board to control the availability and supply of money, as well as the amount of bank reserves and loan. An econometric analysis of the monetary policy reaction function in nigeria 1 1 1. Monetary policy management is an instrument to regulate, design, supply and value the cost of money. Price stability is an important precondition for business. Acting in such a way that ecbs monetary policy should meet this objective.
Top 6 objectives of monetary policy economics discussion. Associated objectives are those full employment and stable longterm interest rates and real exchange rates. The result of this study does not support the assertion that a tight monetary policy coupled with a contractionary fiscal policy. For example, there is no specific or identifiable economic growth or development in nigeria and this questions the possibility of the policy. In nigeria, government has always relied on monetary policy as a way of achieving certain economic objective in the economy such macroeconomic objectives. Monetary policy comprises the rules and actions adopted by the central bank. Central bank of nigerias monetary and credit policy guidelines and money supply do have impact on the level of outputs. Economists like wicksteed, hayek and robertson are the chief exponents of neutral money. Monetary policy and central bank of nigeria project topics. Monetary policy refers to the measure which the central bank of a country takes in controlling the money and credit supply in the country with a view to achieve certain specific economic objectives.
It is the demand side economic policy implemented by the government to achieve macroeconomic objectives like growth, consumption, liquidity and inflation. Good monetary policy macroeconomic policy requires mechanisms that ensure appropriate coordination but avoid potential conflicts of interest. Monetary policy also works to achieve stable and sustainable price. Therefore, the problem under study is the application of omo as an instrument of monetary policy in nigeria.
However, one cannot say the goals and objectives of setting up the policies have been achieved. Generally, this study will dwell on the overview of monetary policy. Monetary policy involves the management of money, the supply of money and interest rate. Financial stability frameworks need to be strengthened. Roles and objectives of modern central banks 18 issues in the governance of central banks 2 including the important financial stability function remain to be spelled out clearly, limiting the completeness of governance arrangements. An econometric analysis of the monetary policy reaction. The policy is to see to the stability in wages and prices of goods and services. In nigeria, the major objectives of monetary policy include the attainment of price stability and sustainable economic growth. The objectives of monetary policy include price stability, maintenance of balance of payments equilibrium, full employment and output growth and sustainable economic development and. Mallick 2008 showed that there is substantial evidence of the effectiveness of monetary policy innovations on real economic parameters in developed economies like the united states us and some core european countries. Monetary policy is an instrument given to the central bank of nigeria cbn by the federal government that is, it is a function which is a documentary policy to control the aggregate demanded in the circulation or cost. One of the major objectives of monetary policy in nigeria is price stability.
More so, fluctuation in inflationary rate overtime is a signal to the fact that prices especially of. In order to get a more precise understanding of the effects of the recently practiced discretionary monetary policy on output, credit, and money growth and its grip on attainment of full employment in nigeria, we estimate a model with changes in various monetary policy tools with respect to macroeconomic variables. Monetary policy and its effectiveness on economic development in nigeria author. Pdf the study empirically examines the impact of monetary policy on economic growth in nigeria, in line with the objectives of this study.
Pdf monetary policy and price stability in nigeria. The monetary policy of the european central bank will contribute to the maintenance of price stability over the medium term, in the context of higher inflation and problems on financial markets. Monetary policy in nigeria since 1986 postsap era monetary policy since 1986 relies on market mechanisms. Objectives and targets of monetary policy central bank of nigeria. To evaluate the performance of monetary policy in nigeria.
Fiscalmonetary policy and economic growth in nigeria. Monetary policy is the policy adopted by the monetary authority of a country that controls either the interest rate payable on very shortterm borrowing or the money supply, often targeting inflation or the interest rate to ensure price stability and general trust in the currency unlike fiscal policy. Louis introduction the question of the effectiveness of monetary policy is a longstanding issue in the literature of monetary. Central banks must have a major voice in policy which is closely linked with financial stability monetary policy. Central bank of nigeria nigeria business news, investing. The legal backing for monetary policy by the bank derives from the various statutes of the bank such as the cbn act of 1958 as amended in cbn decree no. In pursuing these objectives, the cbn recognises the existence of conflicts among. But despite the various monetary regimes adopted over the years, inflation still remains a. In pursuit of the objective of price stability and its accompanying objectives, central banks recognize the existence of conflicts amongst the objectives and the need. In nigeria, the central bank defines money supply as comprising narrow and broad money. In nigeria as in other developing countries, the objectives of monetary policy include full employment, domestic price stability, adequate economic growth and external sector stability. Mary objective of monetary policy as being to o2 report handset lost pdf maintain the value of.
Bank of jamaica monetary policy and financial stability communication strategy issue date. Objectives and targets of monetary policy in nigeria. The main objective of this study is to assess the effectiveness of the monetary policies in nigeria. In the nigeria the major objectives of policy are the attainment of price stability and sustainable economic growth. Objectives of the study achieving price stability and ultimately economic growth is the major objective of monetary policy. Monetary policy and central bank of nigeria project. The fed implements monetary policy through open market operations, reserve requirements, discount rates, the federal funds rate. The objectives of monetary policy include price stability, maintenance of balance of payments equilibrium, full employment and output growth and sustainable economic development and growth. Babajide, isibor areghan akhanolu and okafor tochukwu subject. Generally, central bankers and economists are less divided in their perceptions of the objectives of. Monetary authority of every country decides various policies to control the money supply in the economy to maintain adequate demand which is known as monetary policy and it includes policy. Objectives and targets of monetary policy in the nigeria the major objectives of policy are the attainment of price stability and sustainable economic growth. The primary objective of monetary policy in south africa is to achieve and maintain price stability in the interest of sustainable and balanced economic development and growth. Monetary policy and its role in macroeconomic stability.
The impact of monetary policy on the economic growth of nigeria. The major objective of this study is to empirically analyze the impact of monetary policy on the economy of nigeria. Monetary policy and its effectiveness on economic development in. Consistent with its legal mandates, the objectives of monetary policy. Monetary policy and inflation in nigeria economy project.
Introduction m onetary policy outcomes vary greatly depending on both the target and instrument in use. Second, difficult tradeoffs often must be made between multiple objectives. To achieve this major objective, the study made use of broad money. Monetary policy is the deliberate use of monetary instruments direct and indirect at the disposal of monetary authorities such as central bank in order to achieve macroeconomic stability macroeconomic stability refers to achievement of internal and external balance. The main objective of monetary policy price stability. The role of central banks in macroeconomic and financial. Evolution of the monetary policy framework in nigeria generally, central bankers and economists are less divided in their perceptions of the objectives of monetary policy than in their views about what role the central bank should play in accomplishing these objectives. However, the following specific objectives would also be achieved. The study empirically examines the impact of monetary policy on economic growth in nigeria, in line with the objectives of this study, secondary data were obtained from central bank of nigeria. The central bank of nigeria, like other central banks in developing countries, achieve the monetary policy goal through the amount of money supplied. In pursuing these objectives, the cbn recognises the existence of conflicts among objectives necessitating at some point some sort of tradeoffs. These objectives are necessary for the attainment of internal and external balance and the promotion of longrun economic growth. In economic literature, price stability is an indicator of macroeconomic stability of a country.
The three objectives of monetary policy are controlling inflation, managing employment levels, and maintaining long term interest rates. It helps to achieve the federal government economic objectives. Under the monetary targeting framework in an indirect approach, the liquidity level that is consistent with macroeconomic objectives. Monetary policy in ghana the primary objective of the bank of ghana is to pursue sound monetary policies aimed at price stability and creating.
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