An appraisal of monetary policy’s role in stabilizing economic growth in Nigeria: A study of the CBN (2000–2020).
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Background of the study
Monetary policy is a fundamental instrument for achieving and maintaining economic stability. The Central Bank of Nigeria (CBN) has employed various monetary measures—including interest rate adjustments, open market operations, and liquidity management—to stabilize economic growth between 2000 and 2020. These policies are designed to control inflation, support credit expansion, and create a favorable investment climate (Oluwaseun, 2023). By influencing money supply and interest rates, the CBN plays a critical role in ensuring that the economy remains resilient amid internal and external shocks. Empirical evidence shows that effective monetary policy can lead to improved macroeconomic stability and sustained economic growth. However, challenges such as policy lags, external shocks, and structural inefficiencies sometimes reduce the effectiveness of these interventions (Chinwe, 2024; Ibrahim, 2025). This study appraises the role of monetary policy in stabilizing economic growth in Nigeria, focusing on CBN’s initiatives and their outcomes, and identifying areas for improvement to support long-term economic resilience.
Statement of the problem
Despite the implementation of various monetary policies, Nigeria’s economic growth remains unstable, partly due to policy delays and external shocks that undermine the intended effects of the CBN’s interventions (Oluwaseun, 2023; Chinwe, 2024). These challenges lead to fluctuations in inflation, credit availability, and overall economic performance. The study aims to analyze these shortcomings and propose measures to enhance the effectiveness of monetary policy in stabilizing growth.
Objectives of the study:
- To evaluate the impact of CBN monetary policies on economic growth.
- To identify factors that reduce policy effectiveness.
- To recommend measures for improving monetary stability.
Research questions:
- How do CBN monetary policies affect economic stability?
- What factors hinder their effectiveness?
- What reforms can enhance monetary policy outcomes?
Research Hypotheses:
- Monetary policy positively stabilizes economic growth.
- External shocks and structural inefficiencies reduce policy impact.
- Timely policy adjustments improve stability.
Significance of the study
This study is significant as it evaluates the role of monetary policy in stabilizing Nigeria’s economic growth. Its findings will provide policymakers with insights into how to enhance the effectiveness of CBN interventions, thereby fostering a more resilient and stable economic environment that supports long-term development (Ibrahim, 2025).
Scope and limitations of the study:
This study is limited to evaluating the impact of CBN monetary policy on economic growth in Nigeria, focusing on policy instruments and macroeconomic outcomes.
Definitions of terms:
- Monetary Policy: Central bank actions to control money supply and interest rates.
- Economic Growth: The increase in economic output over time.
- Policy Lags: Delays between policy implementation and observable effects.
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