Articles

A stable deposit base as opposed to volatile, short-term funds has started to impact positively on interest rates stability. In order to fast track interest rates stability, the CBN introduced a new framework for the implementation of monetary policy in December of 2006. As part of the new framework [Read more]

The institutional set up of the monetary policy process affects the efficacy of monetary policy. In Nigeria, the Monetary Policy Department of the CBN articulates the monetary policy framework and produce draft monetary programme which is considered by a Monetary Policy Committee(MPC) . The MPC also [Read more]

The central bank use monetary policy to achieve the goals of macroeconomic management. Consequently, monetary policy is employed as a tool to control or influence monetary aggregates such as interest rates, money supply and bank credit, including the exchange rate, with a view to achieving set polic [Read more]

The mechanism by which monetary policy is transmitted to the real economy remains a central topic in macroeconomics. The bank lending channel represents the credit view of this mechanism. According to this view, monetary policy works by affecting bank assets (loans) as well as banks’ liabiliti [Read more]

The purpose of monetary policy is to influence the tempo of economic activities in the country. The manner in which this policy affects real economic aggregates such as inflation, output, interest and exchange rates and employment is referred to as transmission mechanism. In theory, monetary policy [Read more]

Monetary policy works in part by altering credit flows. The use of legal reserve requirements provide monetary authorities with considerable leverage over the quantity of funds that banks may maintain, just as open market sales reduces the real quantity of deposits banks can issue. This in turn indu [Read more]

The central bank tries to maintain price stability through controlling the level of money supply. Thus, monetary policy plays a stabilizing role in influencing economic growth through a number of channels. However, the scope of such a role may be limited by the concurrent pursuit of other primary ob [Read more]

Fiduciary or paper money is issued by the Central Bank on the basis of computation of estimated demand for cash. Monetary policy guides the Central Bank’s supply of money in order to achieve the objectives of price stability (or low inflation rate), full employment, and growth in aggregate [Read more]

Monetary policy affects all aspects of our economic and financial decisions-whether to buy a car, build a house, start up a business or to expand the existing one, whether to send one’s child to school or to make the child learn a trade. Monetary policy tries to influence the performance of th [Read more]

The Interest Rate Effect: The Central Bank of Nigeria (CBN) may decide to make a change in the Minimum Rediscount Rate (MRR). The MRR is the official interest rate of the CBN, which anchors all other interest rates in the money market and the economy. CBN’s decision on the MRR affects the leve [Read more]