Interest Rate In Nigeria Research Articles

Association Between Government Expenditures, Inflation and Interest Rate in Nigeria

The study analysed the relationship between government expenditure, economic growth, inflation and interest rate in Nigeria. The high inflation and interest rate with high government expenditure has been a problem for the Nigerian economy. Secondary data from 1986 to 2022 were collated from the Central Bank of Nigeria Statistical Bulletin and analyzed using multiple regression analysis. The results showed a positive relationship between inflation rate, government expenditure and Gross Domestic Product (GDP). This means that as inflation and government expenditure increased, real gross domestic product (GDP) would increase while there existed an inverse relationship between interest rate and gross domestic product (GDP), which implies that as interest rate increased, GDP would decrease. The test for the model fitness using adjusted R2 indicated the predictor values accounted for 95 per cent variations in the dependent variable (GDP). The study therefore recommended that monetary and fiscal authorities should regulate government expenditure by targeting a contractionary fiscal policy which decreases the amount of government expenditure in a bid to tackle inflationary trends. The government should aim at inflation targeting through a single-digit interest rate which could encourage the private sector to accumulate funds to be used to augment government efforts in regulating stability in the economy. Besides, even though the structural inflation facing the country did not have a very significant effect on the domestic economy concerning government expenditure and its impact on GDP, this should be resolved by dismantling all rigidities and bottlenecks such as the war against insecurities and herdsmen that have been distorting farming and agricultural output in Nigeria of late.

Effect of Bank Credit to the Private Sector on the Performance of Manufacturing Sector in Nigeria

The study investigated the effect of bank credit to the private sector on the performance of manufacturing sector in Nigeria, from 1981 – 2021. The objective of the study is to determine the effect of bank credit to the private sector (CPS) on the manufacturing output in Nigeria. To carry out the study, data were sourced from the Central Bank of Nigeria statistical bulletin and National Bureau of Statistics for various years. The dependent variable for the study was manufacturing output while the proxies for exploratory variable include; credit to the private sector (CPS); interest and exchange rates. For analysis and estimation, Autoregressive Distributed Lag (ARDL) method was adopted. Augmented Dicker Fuller (ADF) tests for stationarity showed that the variables were integrated at first level while ARDL Bound tests established a cointegration relationship of the variables. The result of the study revealed that credit to the private sector (CPS), interest rate; and exchange rate (independent variables) on the aggregate accounted for 93.9% of the total variations on manufacturing output (dependent variable) in Nigeria during the study period while 6.1% was due to stochastic error. The result further found out exchange rate had a positive coefficient value and a significant impact on manufacturing output in Nigeria during the period of study while other explanatory variables that include credit to the private sector and interest rate were statistically insignificant on manufacturing GDP during the study period. On the basis of the findings, the researcher recommends that Central bank of Nigeria as an apex bank should apart from using both direct and indirect controls should strengthen the use of moral suasion to encourage banks not to relent in granting the sector as the government endeavours to diversify the revenue sources of the economy. Secondly, government and Central Bank of Nigeria (the apex regulatory body of banks) should take bold steps and use all necessary economic and financial policies and regulations to make lending a single digit interest rate in Nigeria especially in a critical sector like agriculture.

Investigating the Joint Impact of Exchange Rate and Foreign Direct Investment Inflows on Domestic Interest Rate in Nigeria

<p><span lang="EN-US" style="font-size: 14pt; font-family: 'times new roman', times, serif;">The sensitive nature of interest rate has spurred empirical interests on the factors that determine it. This paper examined the joint impact of exchange rate and foreign direct investment inflows on interest rate in Nigeria over the period from 1981-2022. The study made use of the auto regressive distributed lag (ARDL) bounds test and results of findings reveal that in both the short-run and the long-run the impact of the interaction between FDI inflows and exchange rate on real interest rate was negative and significant. Also, while credit to the private sector was found to have significant positive impact on real interest rate in both the time horizons, the impact of consumer price index was negative only in the short. Oil revenue was found to impact positively on real interest rate only in the long-run, but the impact of broad money supply was negative and significant in both the short-run and the long-run. The study suggests that policies to regulate domestic interest rate should focus on joint regulation of both exchange rate and FDI inflows and this requires a synergy between monetary and fiscal policies.</span></p>

Examining the Impact of Financial Openness on Domestic Interest Rate in Nigeria

The sensitive role played by domestic interest rate in the economy has made studies on its determinants paramount. This study therefore used the autoregressive distributed lag (ARDL) bounds framework to investigate the impact of financial openness on domestic interest rate in Nigeria over the period from 1980–2020. The study included three de facto financial openness measures, namely: foreign direct investment (FDI) inflows, FDI outflows and portfolio investment as well as one de jure financial openness measure, namely: capital account openness. The short-run results revealed that while FDI inflows had a negative but non-significant impact on domestic interest rate, the impact of FDI outflows was positive and significant. The short-run results also indicated that while foreign portfolio investment had a positive but non-significant impact on domestic interest rate, the impact of capital account openness was positive and significant. In the long-run, the study revealed that FDI inflows had a negative but non-significant impact on domestic interest rate. In another vein, while FDI outflows was found to impact on domestic interest rate positively, the impact of capital account openness was also found to be positive. The study therefore concludes that domestic interest rate in Nigeria was influenced positively by both FDI outflows and capital account openness in the two time horizons and this has implications for monetary policy setting. Based on these findings, the study recommends that apart from the traditional policies used in the control of domestic interest rate, monetary authorities in Nigeria should also regulate capital outflows in their quest to direct interest rate to a desired direction.

Nigerian Monetary Policy (1991-2021): Money Supply Rate and Inflation Rate

Monetary policy can be so dicey or delicate that it requires great tact from the monetary authority. Contractionary monetary policy, when pushed too far, drags the economy to recession while` extreme expansionary monetary policy sinks the economy to liquidity trap. Central banks are in charge and are expected to favorably run the monetary policy by adjusting interest rates, influencing local lending rates, buying foreign currency, printing money, and use of other tools to modulate currency exchange rates, manage inflation, etcetera, with a sole target of creating a healthy economy. This study looks into the effect of money supply rate, exchange rate and interest rate on inflation rate in Nigerian economy between 1991 and 2021. With secondary data, the variables are found to be of mixed order of integration and, therefore, the ARDL model is our parameter estimator. Our model is found to be stable and our empirical investigation reveals that both money supply rate and interest rate in Nigeria have no significant effect on Nigeria’s inflation rate while exchange `rate has a significant inverse effect on Nigeria’s inflation rate – the less favorable the exchange rate, the more biting the inflation. The study is wrapped up `with a recommendation that Nigerian government/authorities should rise up to occasion of fixing the insecurity challenges of the nation so as to create safe environment that can attract local investments as well as foreign direct investments which, among other benefits, will be favorable to Nigeria in exchange rate.

Deregulation of Interest Rate in Nigeria and Deposit Money Bank’s Performance (1996 – 2018)

This study looked at the relationship between interest rate deregulation and performance of Nigerian deposit money banks for the period 1996-2018. Interest rate deregulation was broken down into prime lending rate, maximum lending rate, 3-month deposit rate, and over 12-month deposit rate, with return on assets (ROA) serving as a proxy for deposit money bank performance. Dates for the variables listed above were obtained from the Central Bank of Nigeria Statistical Bulletin (2018 edition) and the World Bank data base. The data were assessed for stationarity with the Dickey-Fuller (D-F) test, long-run relationship with the Bound's co-integration test, and ARDL reliability with serial correlation, heteroscedasticity, and normality tests. The results of the tests revealed that all of the variables were integrated of order zero or one, and that the variables have a long-run relationship. As a result, the ARDL model for parameter estimation revealed that only prime lending rate was positively connected to bank ROA, whereas none of the explanatory factors were statistically significant. The researcher then claimed that there is no meaningful association between interest rate deregulation and the performance of Nigerian deposit money banks during the study period. As a result, deposit money institutions should attempt to mobilise appropriate savings from surplus units by offering deposit rates capable of enticing savers to grow their savings and increasing the availability of loanable funds.

Monetary Policy and Long Run Economic Growth in Nigeria: An Application of the Vector Error Correction Mechanism

The inability of most developing economies to use monetary policy to engender real economic growth in their countries prompted the researchers to empirically assess the impact of monetary policy on economic growth in Nigeria between 1980 and 2014. The study employed an econometrics approach making use of the ADF unit root test, Johansen cointegration, Vector error correction model, Pairwise granger causality test and variance decomposition. The Vector Error Correction Mechanism result shows a positive short and long run relationship between both narrow money supply and broad money supply and economic growth in Nigeria with model strength of 75%. The Pairwise granger causality test shows a bi-directional causality between broad money supply and economic growth in Nigeria and was statistically significant at 5% level of confidence. Recommendations were for the government to use her contractionary monetary efforts and implement relevant policies to curtail the inverse effect of the persistent variation in the value of exchange rate, price level and interest rate in Nigeria and adequate regulation of the quantity of money in circulation to avoid hyperinflation and other unpredictable monetary volatilities.

English

The generalized Fisher effect has attracted a great deal of controversy around the world. This is similar in the Nigerian scenario as study established that there exist no long-run relationship between stock returns and inflation while some studies reported that only a unidirectional causation of returns on stocks with money flow exist as the variation in the flow of money will alter returns on stocks significantly, but not in the opposite direction. Therefore, this study examined the relationship between stock returns, inflation and interest rate in Nigeria with objective of testing the Fisherian theory. The Fisherian theory of interest postulates that changes in the value of money would be reflected in nominal interest rates and stock returns in the same proportion over the long-run. This study tested the validity of this hypothesis in a small open economy, Nigeria. A battery of econometric techniques were employed (descriptive and inferential) for the sake of robustness. In line with the theoretical postulation of the Fisherian theory of interest, the findings established a long-run relationship among the selected series. Specifically, the study found that the price level coefficient exhibits a positive and significant relationship with stock price in the long-run. Therefore, evidence abounds of a great deal of the Fisherian postulation in the analyses carried out and conclude that common stocks are, indeed, a good hedge against inflation in Nigeria.   Key words: Fisherian theory, interest rates, Nigeria, small open economy, stock returns.

IMPACT OF MONETARY POLICY TARGETS ON CAPITAL MARKET DEVELOPMENT IN NIGERIA

This study empirically examines the impact of monetary policy targetson capital market development in Nigeria from 1986-2018. Time series data and econometric tools were used to test for the stationarity and causality effect. The Auto-Regressive Distributed Lag Model (ARDL) and Error Correction Model (ECM) techniques were used to examine the short-run and long-run impact and relationship between Monetary Policy and Capital Market Development in Nigeria. The study revealed that both in the long run and short run Exchange Rate (EXCHR), Inflation Rate (INFR), and Interest Rate in Nigeria (INTR)were negatively related to Capital Market Development (CAMKTD) in Nigeria and they were statistically insignificant in explaining changes in Capital Market Development (CAMKTD) in Nigeria. On the other hand, inthe long run, Money Supply was positively related to Capital Market Development (CAMKTD) in Nigeria and was statistically significant at a 5% level significant while Money Supply (M2) was positively related to Capital Market Development (CAMKTD) in Nigeria both in the long run and short-run and was statistically significant at 5% level of significance. Therefore, the study recommends that government should improve the efficiency and effectiveness of the money supply in Nigeria since it was statistically significant in determining the improvement of Capital Market Development (CAMKTD) in Nigeria.

Analysis of the influence of interest rate on money supply and investment in Nigeria: a vector error correction model (VECM) approach

The research analyzed the influence of interest rate on money supply and investment in Nigeria. It specifically analyzed the influence of working capital, return on investment, earning per share and gross operating profit on interest rate in Nigeria. Data was extracted from the Annual financial report of a manufacturing company using both descriptive research method and covariance while Autoregressive Distributed Lag Model (ARDL) and Vector Error Correction Model (VECM) were used to analyze the relationship which exist among the variables. The result of the findings showed that there is cointegration which implies aa long run relationship among the variables. The result revealed that Earning Per Share (EPS) had no significant impact on interest rate manufacturing firms in Nigeria. Furthermore, the result depicted that gross operating profit has a significant and positive impact on interest rate of manufacturing firms in Nigeria. The research recommends that financial managers increase their money supply and ensure that it is properly managed in order to enhance their investment, thus strengthening firm profitability. Furthermore, we suggest that financial managers should increase investment in working capital to accelerate their productivity so that they can also improve the profitability of the firms.

Regulated Interest Rate, Deregulated Interest Rate and Economic Growth in Nigeria: A Dissaggregated Analysis

This study investigates the effect of interest rate on economic growth in Nigeria using annual data spanning the period of 1970–2016. Specifically, the study analyzes the effect of regulated and deregulated interest rates on economic growth in Nigeria. The study employs Ordinary Least Square (OLS) techniques to achieve the objectives. The regression models employed for analysis are specified and categorized to capture: the regulated interest rate regime (1970 – 1986); the deregulated interest rate regime (1987 – 2016) and the full period of study (1970 – 2016).The study reveals that: there is a negative and significant relationship between regulated interest rate and economic growth in Nigeria; there is a negative and significant relationship between deregulated interest rate and economic growth in Nigeria; there is a negative and significant relationship between interest rate and economic growth in Nigeria. The policy implications are easily discernible: high interest rate is detrimental to economic growth in Nigeria; interest rate can be used as a policy variable by the monetary authorities to control the flow of credit and also influence economic growth in Nigeria. Therefore, irrespective of the kind of regime, the management of the interest rate in Nigeria calls for high level discretion on the part of monetary authorities if macroeconomic goals are to be achieved. Thus, the study recommends that: interest rate should be closely monitored, stabilized and effectively managed. Monetary authorities should endeavour to maintain the interest rate at a single digit and at minimal levels to encourage investment and foster output growth.

Conditional Variance and Interest Rates in Nigeria: Evidence from the Egarch-in-Mean Framework

This study captured the components of Exponential Generalized Autoregressive Conditional Heteroscedasticity (EGARCH-in-mean) framework; conditional variance (volatility), asymmetric effect and volatility persistence and interest rate in Nigeria. This is because ofthe usefulness of interest rates in measuring the financial conditions, also are major instrument of monetary policy and volatility being one of the most important concepts in finance. The study used real interest rate obtained from Central Bank of Nigeria and National Bureau of Statistic from 1970 to 2018 inclusive. The accommodating EGARCH-in-mean framework was employed in the estimation of the model. The following were found; conditional volatility is negatively and significantly related to interest rate. Also that interest rate volatility in Nigeria is not persistent. Again, there is existence of leverage effect, implying existence of asymmetric effect in the Nigerian financial market due to interest rate volatility. Consequently, the researchers suggest as follows; due to the presence of asymmetry effect, the Bankers’ Committee tightens their seat belt to forestall subsequent volatility in interest rate in Nigeria by consistently and regularly reviewing interest rate to accommodate the dynamism of the economy. Again adequate palliative measures be made available to enable investors continue with their economic activity in any business cycle in Nigeria.

Interest Rate and Inflation Nexus: ARDL Bound Test Approach

The paperestimates the impact of interest rate on inflation in Nigeria. The study makes used of Autoregressive Distributed Lag model (ARDL) on time series Data, for the period 1970-2016. The data set on inflation, money supply, interest rate, GDP per capita and exchange rate were tested for stationary using ADF, PP and KPS tests and established stationarity at I (1) for all the variables. ARDL testresults reveal that interest rate is inflationary in both the short-run and long-run as it positively and significantly influencing inflation in the two periods which is in conformity with the arguments of the fiscal policy supporters but contradict the arguments of the monetary policy supporters. The findings of the study imply that interest rate in Nigeria is inflationary. Meaning that increase in the rate of interest rate will lead to an increase inflation rate. Therefore, the research study conclude that interest rates should be adjusted with caution, and also implies that fiscal policy measure will be very effective in converting inflation in the country. Keywords: ARDL Bound Test, Interest Rate, Inflation, Exchange Rate, Fiscal Policy, Monetary Policy. DOI : 10.7176/JESD/10-20-07 Publication date :October 31 st 2019

Foreign Exchange Rate and Economic Growth Nexus: New Evidence from Nigeria (1981 to 2017)

The paper estimates the impact of foreign exchange rate on economic growth of Nigeria. The study makes used of Autoregressive Distributed Lag model (ARDL) on time series Data, for the period 1981-2017. The data set on real effective exchange rate, inflation rate, money supply, lending interest rate, real GDP and foreign direct investment, oil revenue and trade openness (% of GDP) were tested for stationary using ADF and PP tests and established stationarity at I (1) for five variables and I (0) for two variables. The correlation test result shows that the highest correlation is between money supply and oil revenue while the lowest correlation is between inflation rate and foreign direct investment. The ARDL Co-integration test revealed the existence of long-run relationship among the variables. ARDL test results reveal that real effective exchange rate is negatively and significant in explaining economic growth in Nigeria in the long-run. In the short-run, the lag value of real effective exchange rate is insignificant in explaining the changes in the current rate of economic growth. in the same period, the lag value of money supply is negative and significant in explaining GDP. But in the long run it is positive and significant in explaining economic growth in Nigeria. The rate of inflation both in the short run and long run is negatively and significant in explaining GDP. The Error Correction Term value of 20.7% shows the speed of adjustment toward long-run equilibrium The findings of the study imply that interest rate in Nigeria is inflationary. Meaning that increase in the rate of interest rate will lead to an increase inflation rate. Therefore, the research study concludes that the impact of foreign exchange rate on the economic growth of Nigeria is negative and significant and that the monetary authorities should adopt flexible exchange rate in Nigeria. Keywords: ARDL, foreign exchange rate, Economic growth, monetary authorities. DOI : 10.7176/JESD/10-18-18 Publication date :September 30 th 2019

Implication of Monetary Policy Rate and Interest Rate on Exchange Rate in Nigeria: 1981-2017

The study investigated the implication of monetary policy rate on the exchange rate and interest rate in Nigeria, 1981-2017. Because of the above-stated problems, the specific objectives are to: Investigate the effect of monetary policy rate on the exchange rate in Nigeria, determine the effect of the monetary policy rate on interest rate in Nigeria. The analysis of error correction and autoregressive lags fully covers both long-run and short-run relationships of the variable under study. The statistical tool of analysis employed in the study is Autoregressive Distributed Lags (ARDL) and Philips Peron method of stationary testing and structural breakpoint unit root test., these methods were employed to check the stationarity and breakpoint analysis of the time series data employed in this study. The study observed that monetary policy rate has a positive and significant effect on the exchange rate in Nigeria. It was also observed that the monetary policy rate has a positive and significant effect on the interest rate in Nigeria. Overall, our results indicated that the impact of monetary policy on the exchange rate was significant. There was a positive and significant relationship between monetary policy variables and exchange rate. The conclusion that is drawn from our results is that monetary policy remains an effective and potent tool for ensuring a stable exchange rate in Nigeria. The study recommended that monetary policy should be used to create a favourable investment environment by facilitating the emergence of market-based interest rate and exchange rate regimes which could attract domestic and foreign investments. Second; the Central bank of Nigeria (CBN) need to avoid ordination and balance between monetary and fiscal policies to ensure the smooth realization of monetary policy goals. Policy inconsistency or summersault to determine its policy impact before contemplating a change. Finally, there should be a coo.

Fiscal and macroeconomic policies dynamics in Nigeria

This study examined fiscal policy and macroeconomic policy dynamics in Nigeria. The study specifically assessed whether there is a long run and short run causal relationship running from fiscal policy instruments such as government revenue, government expenditure and debt to macroeconomic variables such as interest rate and GDP in Nigeria. The data for the study were source from the CBN statistical bulletin for the period 1980 to 2016. The exploratory design was combined with the ex-post facto research design; the data collection method was desk survey. The study used the Vector Error Correction Mechanism (VECM) for data analysis. Findings from the analyses showed that there is no long run and short run causality running from fiscal policy instruments such as government revenue, government expenditure and debt to interest rate in Nigeria. The study also showed that there is no long run and short run causality running from fiscal policy instruments such as government revenue, government expenditure and debt to GDP in Nigeria. The study on the basis of these findings recommends that Fiscal policy should be tailored towards sustaining economic growth and development; in view of this government avoid further borrowings as this may increase the debt servicing burden and result in a negativity effect on growth in the long run and lastly that fiscal policy should be used to complement monetary policy effects as if used alone may not achieve the desired target for interest rate in Nigeria. Keywords: Government Expenditure, Government Revenue, Government Debt, Fiscal Policy, Interest rate, Inflation rate, Economic growth

An Empirical Relationship between Foreign Exchange Rate, Inflation and Interest Rate in Nigeria

This paper investigates the empirical relationship between naira/US dollar exchange rate, inflation and interest rate in Nigeria. The study uses annual time series data from 1970-2017. Augmented Dickey-Fuller unit root test, Johansen cointegration, fully modified least squares; Error correction model and Granger causality test based on Toda-Yamamoto procedure were employed in this study as methods of analysis. The results reveal that all variables are integrated of order one and hence cointegrated. The study finds inflation as having negative and significant impact on exchange rate while interest rate was found to have positive and significant impact on the foreign exchange rate in Nigeria in the long-run. The economic impacts of inflation and interest rate on the exchange rate in the short-run are found to be low, temporal and not long lasting. The ECM model has identified a moderate speed of adjustment by 50.39% for correcting disequilibrium annually for achieving long-term equilibrium steady-state position. The Granger causality test result shows statistical evidence of unidirectional causality between exchange rate and inflation and between exchange rate and interest rate in the short-run. There is also a unidirectional causality that runs from interest rates to inflation meaning that inflation is Granger caused by interest rates in Nigeria. The study recommends that lowering the lending interest rate and targeting inflation to single digit is a better exchange policy strategy for Nigeria.

EFFECT OF MONETARY POLICY ON ECONOMIC GROWTH IN NIGERIA: AN EMPIRICAL INVESTIGATION

The study investigated effect of monetary policy on economic growth in Nigeria. The natural log of the GDP was used as the dependent variables against the explanatory monetary policy variables: monetary policy rate, money supply, exchange rate, lending rate and investment. The time series data is the market controlled period covering 1986 to 2016. The study adopted an Ordinary Least Squared technique and also conducted the unit root and co-integration tests. The study showed that long run relationship exists among the variables. Also, the core finding of this study showed that monetary policy rate, interest rate, and investment have insignificant positive effect on economic growth in Nigeria. Money supply however has significant positive effect on growth in Nigeria. Exchange rate has significant negative effect on GDP in Nigeria. Money supply and investment granger cause economic growth, while economic growth causes interest rate in Nigeria. On the overall, monetary policy explain 98% of the changes in economic growth in Nigeria. Thus, the study concluded that monetary policy can be effectively used to control Nigerian economy and thus a veritable tool for price stability and improve output.

Interest Rate Deregulation and Dynamics of Industrial Sector’s Productivity in Nigeria

The systematic deregulation of interest rate in Nigeria in 1987 has continued to generate unending controversies among policy makers and other key stakeholders about its spill-over effects on sectoral performance and economy wide aggregate. In view the growing controversies, this paper analyzed the long-term implication of interest rate deregulation on the productivity of the industrial sector in Nigeria between 1987 and 2016. Specifically, this paper focused attention on the impacts of prime lending rate, deposit rate, monetary policy rate and cash reserve ratio on industrial output. The datasets on each of the variables were culled from the Central Bank of Nigeria Statistical Bulletin. The Autoregressive Distributive Lag (ARDL) model was adopted for the estimation of the long run behavior of the exogenous variables. The Augmented Dickey-Fuller (ADF) stationarity test approach and ARDL based bounds test approach to cointegration were applied to test the null hypotheses of a unit root and no long run relationship respectively. It was found from the ADF tests results that the variables are fractionally integrated. The bounds test result also indicates that the variables are long run relationship, hence necessitating the rejection of the null hypothesis of no cointegration. The long run regression result shows that at 10 percent level, prime lending is positively related to industrial output. This finding is in contrary to the theoretical expectations. It was equally uncovered from the result that monetary policy rate negatively impacted on industrial output at 5 percent level. Similarly, the deposit rate contracts the productivity of the industrial sector in the long run. In of these findings, this paper recommends among others that the Central Bank of Nigeria should ensure that interest rate deregulation is frequently monitored and primarily tailored towards ensuring that the prevailing market rate of interest provides opportunity for improved performance of the industrial sector.

The Effects of Inflation and its Risk on Interest Rate: An Empirical Evidence from Nigeria

The paper examines the effects of inflation and its risk on interest rate in Nigeria. The data sets cover the period of 1995:M1 to 2014:M12. ARCH (1) and GARCH (1, 1) were used to measure inflation risk and the result indicates that GARCH(1, 1) measures inflation risk better than ARCH(1) model based on Schwarz Information Criterion (SIC), and adopting multiple regression method, the result reveals that inflation and inflation risk exact negative and positive impacts on interest rate respectively, but none is significant. This result implies that the direction of this interest rate by monetary policy rate (MPR) is not proactive enough to curb the rising inflationary pressure in Nigeria. Hence, there is a need for more proactive monetary policy rate that can cut back the rising inflationary pressure.