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The analysis aims to quantify how the Central Bank of Nigeria's policy rate affects lending rates, inflation, and real output over 64 years.

February 19, 2026Open Access

Monetary Policy Transmission in Nigeria: A Sixty-Four-Year Analysis of Central Bank Policy Rate Effects on Lending Rates, Inflation, and Real Output (1960–2024)

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The analysis aims to quantify how the Central Bank of Nigeria's policy rate affects lending rates, inflation, and real output over 64 years.
Integrated multi-method approach using 3SLS system estimation, TVP-VAR, and NARDL models.
Analysis of data from 1960 to 2024.
Identification of structural breaks in policy effectiveness during key economic periods.
Systematically incomplete interest rate pass-through observed, with long-run coefficients between 0.62 and 0.74.
Faster adjustment to policy rate increases compared to decreases.
Highest transmission was during the direct monetary control era (R² = 0.675) and inflation targeting lite showed a peak explanatory power (R² = 0.791) but with insignificant individual coefficients.

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This analysis demonstrates monetary policy impacts on inflation and lending rates in Nigeria, highlighting implications for policy design.

Onipe Adabenege Yahaya (2026) studied this question.

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This analysis demonstrates monetary policy impacts on inflation and lending rates in Nigeria, highlighting implications for policy design.