ABSTRACT

The study examines the impact of monetary policy on price stability in Nigeria from 1980 to 2016. The Error Correction Mechanism (ECM) model was employed after conducting a number of diagnosis test and ensured the data were stable. The results of the analysis showed that interest rate has a greater impact on price stability in Nigeria, while other variables were found to have a joint significant impact on price stability in Nigeria. The study recommends that to reduce inflationary pressure in Nigeria, the monetary authority need to initiate and push forward effective and efficient monetary policy measures via interest rate in order to adequately stabilize prices.