EFFICIENCY OF MONETARY POLICY IN CONTROLLING INFLATION IN NIGERIA
CHAPTER ONE INTRODUCTION
1.1 STUDY BACKGROUND
In Nigeria, the central bank, which is at the pinnacle of the banking system, employs a variety of policy measures and techniques to control and regulate money and credit in order to achieve the desire for the package of discussing the efficiency or otherwise of general economic management strategies.
Inflation became a concern in Nigeria around the early 1970s, according to government policy statements.
The contention is supported further by the fact that the economy began to experience double-digit inflationary rates in the early part of the decade, indicating that the power of inflation is not unique to the Nigerian government. However, it is a general problem confronting the Nigerian government in achieving a higher level of economic development as the period generally leads to inflation or spiral in the country.
However, whether inflation in Nigeria is caused by monetary mismanagement on the part of the authorities concerned or by an inherent structural deficiency remains uncertain.
Many factors have been identified to be responsible for inflationary pressure in the economy, and in a symposium in Nigeria held some time ago, many of the participants emphasized money supply nature of government expenditure limitation in real output and the influence comported as the major causes of inflation.
It is the responsibility of the government to formulate monetary policy.
1.2 THE PROBLEM’S STATEMENT
Many attempts have been made by Nigerian authorities to achieve greater rates, which have generally been accompanied with a certain degree of price increase in recent years.
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Indeed, it is increasingly acknowledged that a quick economic growth process is likely to cause inflation and pressure.
However, whether the country’s inflation problem is attributable to mishandling of monetary policy tools or structural weaknesses remains a confounding factor.
The subject of inflation or reflation to economic growth and development has been extensively explored during the previous decade. This issue is not exclusive to Nigeria, but has become a global phenomenon. Inflation is widely regarded as socially unjust around the world.
Inflation also has an impact on general economic behavior and resource allocation patterns. By disclosing pricing relations and mining general confidence, extended tends to divert investments away from the producing sector, resulting in sluggish growth.
In addition, inflation discourages private savings and fosters speculation among economic units.
Another consequence is that it causes balance-of-payment problems and lessens the extent to which national economic management straggles, which are generally guided by new classical and Keynesian persuasions that have gained strength over decades.
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EFFICIENCY OF MONETARY POLICY IN CONTROLLING INFLATION IN NIGERIA
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