CHAPTER ONE
1.0 INTRODUCTION
In Nigeria, the central bank is at the apex of the banking pyramids, applies a variety of policy measure and techniques to control and regulate money and credit in order to attain the desired economic goals or objectives. It is therefore necessary and important to use the package of monetary policy measures as basis for discussing the efficiency or otherwise of general economic management strategies. Government policy statements clearly reveal that inflation became a problem in Nigeria about the early 1970’s. This contention can be substantiated from the fact that the economy began to experience double digit rate of inflation from early part of the decade. The problem of the inflation is not peculiar to Nigeria, but it is a global problem confronting the majority; if not all countries of the world. The attempt by the Nigeria government to attain a higher level of an economic development at this period, generally led to spiral inflation in the country.
But whether inflation in Nigeria is due to monetary mismanagement on the part of the authorities concerned or came by inherent structural deficiencies, still remains uncertain. Many factors have been identified to be responsible for inflationary pressure in the country. In the process of formulating monetary policies, it is paramount important to specify objectives and also impossible to evaluate performance. Government policies are to achieve certain objective which include price stability, high rate of economic growth and balance of payment equilibrium. Monetary policy can be employed in encouraging investment and controlling inflation while fiscal policy can be effective in reducing consumption of luxury and ostentatious goods. But the major concern of this project is to explore the effectiveness of monetary policy in controlling inflationary pressure in an economy like Nigeria. It is generally believed by some economists that inflationary effects are quite harmful to some business establishments. This could be so because vendors often loss in the sense that the value of their money falls short of its original purchasing power. The extent of the effect of inflation in Nigeria has forced Nigeria to adopt several monetary policy measures within. However these policy measures have not solved the problem of inflation as could be seen for the associated increase in the cost of production during the period under consideration It is therefore in view of the above that it becomes necessary to example some of the mixed policy instruments used and hence their efficiency as regards inflationary control. The problems of inflation in reflection to economic growth and development have been extensively discussed. The problem is.
1.1 STATEMENT OF PROBLEM
The problem this study attempts to address is to evaluate the efficiency of monetary policy in controlling inflation in Nigeria. Also without this study it will be impossible to determine whether monetary policy is efficient in controlling and bringing down inflation to the nearest minimum and to achieve its original objectives. This piece also do expand and enrich available literature and could provide opportunity for general statement monetary the performance of effective monetary policy in Nigeria. Studies on the performance of monetary policy in Nigeria and monetary policy programme in general are emerging from the favoured countries. Steven’s (1992) asserts that abundant evidence is available to support that inflation is a big problem affecting Nigeria economic development. However, according to him some empirical evidence are not entirely clear in the support of the assertion, evidence from less favoured economic environment like Nigeria are either non existence or very scanty and untested. Hence, the precise performance of monetary policy can hardly be presently generated.
