Nigerian Monetary Policy
INTRODUCTION Nigeria monetary policy has been conducted under wide ranging economic environment since its establishment in 1959, the Central Bank of Nigeria (CBN) has continued to play the traditional role expected of the central bank, which is the regulation of stock of money such a way as to promote the social welfare (Ajayi, 1999). This role is anchored on the use of monetary policy that is usually targeted towards the achievement of full-employment equilibrium, rapid economic growth, price stability, and external balance. Over the years, the major goals of monetary policy have often been the two later objectives. Thus inflation targeting and exchange rate policy have dominated CBN’s monetary policy focus based on assumption that these are essential tools of achieving stability. Commercial banks have been positively been affected through monetary policy by the federal government in other to attain a high level of government target objectives and attain high level of economic growth and stability including relatively stable price and low unemployment. Due to the present challenging conceptual and technical problem such as price instability, inflation rate, unfavorable balance of payment it is difficult for the effort of monetary policy to show there full effort or ability on the economy. But monetary policy has become a variable measuring achieving aggregate economic potential in specific environment of the 1970’s it rest on the relationship between the rate of interest in the economy that is the price at which money can be borrowed, and the total supply of money. Monetary policy uses variety of tools to control one or both of these, to influence outcome like economic growth, inflation, exchange rates with other currencies and unemployment, where currency is under a monopoly of issuance, or where there is a regulated system of issuing currency through banks which are tired to a central bank, the monetary authority has the ability to alter the money supply
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