Monetary Policy Transmission Channels and Inflation in Nigeria

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This analysis examines how interest rates and money supply affect inflation in Nigeria, suggesting potential policy improvements.

An increase in the monetary policy rate is inflationary in both the short and long run, complicating policy effectiveness.
The bank lending rate also positively correlates with inflation, but its one-period lag has a significant negative effect.
Treasury bill rates proved ineffective against inflation, while broader money supply growth consistently contributed to inflation.
Recommendations include adopting forward guidance and improving oversight of commercial bank lending practices.

Shunom et al. (2025) studied this question.

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