Monetary Policy and Economic Misery in Nigeria

The monetary policy has a critical role in determining the economic stability and growth of countries and especially in the developing countries such as Nigeria. Being an instrumental macroeconomic management tool, it is aimed at regulating inflation, stabilizing currency and promoting employment and economic growth. Although these are the goals, Nigeria still has to grapple with the constant economic problems that include high inflation, unemployment, and fluctuating exchange rates that have worsened the economic conditions. This paper discussed the connection between monetary policy and economic misery in Nigeria from 1981 to 2023. The study assessed how monetary policy can enhance the economic welfare of the citizens and offer practical suggestions on how to minimize economic distress. The sources that are used in the study are credible and the world development indicators and the central bank of Nigeria (CBN) have major focus on the central bank of Nigeria (CBN) Statistical Bulletin. The study used the Auto-Regressive Distributed Lag (ARDL) model as its model of analysis, which is a much better methodology compared to the conventional least squares estimation models. The Augmented Dickey-Fuller (ADF) unit root tests were used to test the stationarity of the variables before the application of the ARDL model. With these findings, the study recommends that Central Bank of Nigeria (CBN) should be more holistic in its monetary policy through complimentary fiscal and structural reforms. These reforms should aim at making financial markets efficient and industrial capacity to be productive as well as to work on the supply-side limitations. These would enhance the transmission mechanism of the monetary policy so that it could be able to influence the unemployment rates, inflation and interest rates more and thus enhance the general wellbeing of the people in Nigeria.