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Abstract

This study analyzed the effects of monetary policy on selected macroeconomic variables in Nigeria from 1986 to 2019. The relationship between monetary policy and macroeconomic variables in Nigeria has been a contentious issue due to inconsistent implementation and empirical findings. The study specifically evaluated the impact of monetary policy rate, cash reserve ratio, liquidity ratio, and money supply, as independent variables, on inflation and employment rate, the dependent variables. The study design was ex-post facto and utilized the Error Correction Mechanism (ECM) Model for estimation. The analysis revealed a negative and insignificant relationship between the monetary policy instruments and the selected macroeconomic variables. The conclusion was that the Central Bank of Nigeria's monetary policy adjustments have not effectively improved macroeconomic conditions in Nigeria. The study recommended increasing awareness of financial inclusion in rural areas, promoting collaboration between monetary and fiscal policy managers, and directing efforts towards enhancing the development of both the money and capital markets.
Keywords: Monetary Policy, Macroeconomic Variables, Nigeria.