CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
The Nigerian economy has been plagued with several challenges over the years. In spite of many, and frequently changing, fiscal, monetary and other macro-economic policies, Nigeria has not been able to harness her economic potentials for rapid economic development (Ogbole, 2010).
Monetary policy as the name implies is one of the major economic stabilization weapons which involve measures designed to regulate and could control the volume, cost, availability and direction of money and credit in an economy to achieve some specific macro-economic policy objective. It is a deliberate attempt by the monetary authority (Central Bank) to control the money supply and credit condition for the purpose of achieving certain broad economic objective. It is also the control of money and Bank credit thereby regulating cost of credit such a way it will affect aggregate demand in a direction that would continue to the achievement of healthy balance of payment, price stability and job opportunity (Anyawu, 1993)
However, it will settle in this study that macro-economic stability is a pre-requisite for sustainable growth and poverty reduction. Money supply is been controlled by the government in that firm/investors belief that its rate of growth has something to do with rate of inflation. Bryan (2010) stated that monetary policy should be directed to interest rate rather than money supply and that monetary policy should be at all time subsidiary to fiscal policy.
