Inflation has been regulated over the years by Central Bank of Nigeria (CBN) via monetary instruments like the monetary policy rate (MPR). Nigeria's inflation in the last couple of years however, has been sporadically increasing beyond the monetary authority's control. Nigeria's inflation rate accelerated to 27.33% in November 2023 from its previous figure of 22.41% as at May, 2023. Data culled from the National Bureau of Statistics (NBS) showed that the country's GDP growth rate slowed from 3.11% to 2.31% in May, 2023. The monetary policy committee (MPC) in an attempt to fight inflation has hiked the MPR 7 consecutive times from 11.5% to 18.75% in 2023. Despite all the rate hikes inflation has continued its continuous rise and has been gradually eating into the country's GDP, making households and families to reach poverty level because of the increase in prices of goods and services. The issue of monetary policy instability and high inflation has passed a major concern to Policy makers, Academics and also the Nigerian Economy, hence, this paper examined how monetary policy and inflation could influence Nigerian economic growth. Variables utilized for the study included; monetary policy rate, exchange rate, money supply and Inflation; which were examined against economic growth represented as gross domestic product (GDP). Secondary annual data from 1981 till 2022 and sources from the CBN statistical bulletin were utilized in the study. The sources data were analyzed using the multiple regression technique. Findings showed that monetary policy and inflation rate had negative impact on economic growth for the period under review. However, money supply and exchange rate had positive impacts on Nigeria's economic growth. The Granger Causality test shows that both monetary policy, inflation do not granger cause GDP in Nigeria. The findings thus recommend that government should reduce food inflation and insecurity and also foster infant industry to start production in local industries so that they can begin to increase export and reduce import and proffer solutions to set Open Market Operations rate close to Monetary policy rate so that it can capture economic realities with regards to inflation.
Helen et al. (Thu,) studied this question.