THE EFFECTIVENESS OF MONETARY POLICY IN CONTROLLING INFLATION IN NIGERIA

CHAPTER ONE

INTRODUCTION

1.1     BACKGROUND OF THE STUDY

In Nigeria the central bank which is at the apex of the banking apples a variety of policy measure and technique with which to control and regulate money and credit in other to attain the desire for necessary to sue the package of discussing the efficiency or other wise of general economic management strategies.

Government policy statement clearly revered that inflation become a problem in Nigeria about early 1970s.

The contention can be sustained further by the fact that the economic began to experience double digit rate of inflationary from the early part of the decade probably the power of the inflation is not peculiar to Nigeria government, But it is generally problem confronting Nigeria government to attain a higher level of economic development as the period generally lead to inflation any spiral in the country.

But whether inflation in Nigeria is due to monetary mismanagement on the part of the authorities concerned or caused by inherent structure deficiency still remain uncertain, many factors have been identified to be responsible for inflationary pressure in the economic in a symposium in Nigeria held sometime go, mot of the participants stressed on money supply nature of government expenditure limitation in real output and the influence comported as the major causes inflation in Nigeria.

In the process of formulating monetary policy, it is of government.

1.2     STATEMENT OF THE PROBLEM

Many attempts have been made by the Nigeria authorities to attain higher rates generally being accompanied by certain digress of price increase in recent into years.

The phenomenon developed into several and pronged inflation and stagflation indeed, it is increasingly being recognized that a process of rapid economic growth is likely to provoke inflation and pressure.

However, whether the problem of inflation in this country is due to mismanagement of monetary policy tools structural deficiencies still remain a contriver sail mother.

During the last decade, the problem of inflation or reflation to economic growth and development have been extensively discussed.  This problem is not peculiar to Nigeria, but has ashamed global phenomena on.  It is generally agreed world wide that inflation is socially unjust.  Inflation also affects generally economic behaviour and the patter or resources allocation.  By disporting price relation and under mining general confidence prolonged tends to direct investments way from production section, and this slacker growth.

Further more, inflation discourages private savings and encourages speculation among the various economic units.

Another consequence is that it result in balance of payment difficulties and reduces the extend having it national economic management straggle largely informed by new classical and Keynesian persuasions have stronge over decades.