Effects of an Unchanged Monetary Policy Rate in Nigeria’s Economic Growth

Abstract

Nigeria slipped into recession in 2016 and there was need to implement critical measures to move the country out of recession. The Central Bank of Nigeria (CBN) had to embark on a cycle of policy tightening to curb inflation; this included setting MPR which is the benchmark interest rate at 14%. This has remained unchanged for three consecutive years. GDP recovered after five quarters of continuous contraction recording positive growths of 0.7 and 1.4 percent in quarters two and three of 2017, in 2018 the Nigerian economy grew 1.9 percent respectively, which signaled the exit from the recession. This work uses multi-variable regression analysis. Where economic growth was represented by Gross Domestic Product and inflation rate and data was gotten from the Central Bank Nigeria and National Bureau of Statistics data (2013-2018). This paper examines the impact of an unchanged monetary policy rate (MPR) in Nigeria and how this has affected economic growth. Nigeria slipped into recession in 2016 and there was need to implement critical measures to move the country out of recession. The Central Bank of Nigeria (CBN) had to embark on a cycle of policy tightening to curb inflation; this included setting MPR which is the benchmark interest rate at 14%. This has remained unchanged for three consecutive years. GDP recovered after five quarters of continuous contraction recording positive growths of 0.7 and 1.4 percent in quarters two and three of 2017, In 2018 the Nigerian economy grew 1.9 percent respectively, which signaled the exit from the recession. This work uses multi-variable regression analysis. Where economic growth was represented by Gross Domestic Product and inflation rate and data was gotten from the Central Bank Nigeria and National Bureau of Statistics data (2013-2018). This paper examines the impact of an unchanged monetary policy rate (MPR) in Nigeria and how this has affected economic growth. Key words: Monetary Policy, Economic Growth, Inflation.