THE EFFICIENCY OF MONETARY POLICY IN CONTROLLING INFLATION IN NIGERIA

This research work investigated the efficiency of monetary policy in controlling inflation in Nigeria using primary data collected from 14 commercial banks in Bauchi. Money Supply, Treasury bills rate, monetary policy rate and exchange rate were the variables used in the study to check inflation. The research employed descriptive method to check for the long run relationship between the variables, Augmented Dickey Fuller unit root test to check if the variables are stationary or non- stationary. The study commenced with the analysis of testing the variablesof interest. The analysis test revealed the existence of long-run relationship between the variables. From the result of the analysis, it was also revealed that monetary policy rate, money supply and treasury billrates exert positive influence on inflation in Nigeria. While exchange rate depreciation leads to inflationary growth. This result is consistent with the prediction of economic theory. The study therefore concluded that money supply, treasury bills rate, monetary policy and exchange rate had influence on inflation in Nigeria and recommends that since open market operation using annual Treasury bill rate as proxy has not been effective in managing inflation; therefore, schemes to make it more efficient should be adopted perhaps by offering competitive rates and the monetary authority should re-assess the efficiency of monetary policy rate given its inefficiency as a tool to manage inflation in Nigeria.