An investigation of monetary policy’s role in curbing inflation in Nigeria: A case study of the CBN (2000–2020)
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Background of the Study :
Inflation control is a primary objective of monetary policy, and the Central Bank of Nigeria (CBN) has been at the forefront of this effort between 2000 and 2020. Utilizing tools such as interest rate adjustments, open market operations, and reserve requirement modifications, the CBN aims to curb inflation and stabilize the economy (Emeka, 2023). Empirical studies demonstrate that effective monetary policy can reduce inflationary pressures by influencing money supply and credit conditions. However, Nigeria has continued to experience persistent inflation due to external shocks, fiscal imbalances, and market uncertainties (Ibrahim, 2024). This study examines the role of monetary policy in curbing inflation by analyzing macroeconomic indicators, policy shifts, and market responses. Qualitative interviews with financial experts complement quantitative analyses, enabling a comprehensive assessment of the efficacy of the CBN’s inflation-targeting measures. The research also explores the interplay between monetary policy and other economic variables, providing insights into the challenges and opportunities for achieving price stability (Chinwe, 2025).
Statement of the Problem
Despite the CBN’s concerted efforts, inflation in Nigeria remains persistently high. The gap between monetary policy targets and actual inflation rates suggests that external factors and internal fiscal imbalances may be undermining policy effectiveness (Emeka, 2023). This study seeks to investigate the determinants that affect the success of monetary policy in curbing inflation and to identify potential areas for improvement, thereby contributing to more effective inflation control strategies.
Objectives of the Study:
1. To evaluate the effectiveness of CBN monetary policy in reducing inflation.
2. To identify factors that hinder successful inflation targeting.
3. To propose policy adjustments for enhanced inflation control.
Research Questions:
1. How effective is the CBN’s monetary policy in curbing inflation?
2. What factors limit the effectiveness of inflation-targeting measures?
3. What policy reforms can improve inflation control?
Research Hypotheses:
1. Effective monetary policy reduces inflation levels.
2. Fiscal imbalances adversely affect inflation targeting.
3. Policy adjustments can significantly improve inflation control.
Significance of the Study (100 words):
This study is significant as it investigates the role of monetary policy in curbing inflation in Nigeria, offering insights for the CBN and policymakers to refine their strategies. Improved inflation control is crucial for economic stability and growth, and the findings will contribute to more effective monetary management and sustainable development (Emeka, 2023).
Scope and Limitations of the Study:
This study focuses on the CBN’s monetary policy and its impact on inflation from 2000 to 2020, using macroeconomic data and expert interviews. It does not cover fiscal policy or external economic shocks.
Definitions of Terms:
1. Monetary Policy: Central bank actions that regulate money supply and interest rates.
2. Inflation: The rate at which the general level of prices for goods and services rises.
3. Inflation Targeting: A policy strategy aimed at achieving a specific inflation rate.
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