Nigeria Monetary Policy Rate (MPR) and Monetary Policy Committee (MPC): Who is Fooling Who?

This study empirically examined the impact of monetary policy rate (MPR) on some selected macroeconomic variables such as real gross domestic product (RGDP), inflation proxy by consumer price index (CPI) and exchange rate (EXR) in Nigeria using quarterly data spanning from 2008Q1 to 2019Q4. The preliminary test result for both Augmented Dickey Fuller (ADF) and Philip perron (PP) revealed that the data are all stationary after first difference. The study employed Autoregressive Distributed lag (ARDL) model and Toda-Yamamoto granger causality. The ARDL used to test whether there is a long run relationship between the variables under study while Toda-Yamamoto granger causality used to examine the impact of MPR on the selected macroeconomic variables in Nigeria. The result of the finding shows that there is long run relationship between MPR and RGDP, CPI and EXR. but the impact of MPR on macroeconomic variables is more in the long run than in the short run; the result of Toda-Yamamoto causality indicates that MPR have little or no significant impact on the macroeconomic variables in Nigeria. The result shows that monetary policy shows the moderate impact on the selected macroeconomic variables in Nigeria. This means that if MPC plays their role of proper implementation of MPR, MPR would have a higher impact on the selected variables in the study. So if MPR did not achieve the desired goal it's implied that MPC is fooling MPR. The study recommends that Government should make sure that the monetary policy rate which is the beach-mark rate should strictly be implemented to achieve, the macroeconomic objective of price stability, stable exchange rate, stable economic growth, full employment, and balance of payment equilibrium.