CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Monetary policy usually involve the expansion or contraction of money supply the manipulation of interest rates to make borrowing easier and cheaper or more difficult and deicer depending an prevailing economic condition and challenging of fund to growth sector for increased output. Monetary policy is an integral part of the overall economic policy that regulate the level of money or liquidity in the economy in order achieve some desired policy objective.
Monetary policy is usually the responsibility of the monetary authorities which comprises the central bank and the federal government. In Nigeria the central bank exercise primary responsibilities for initiating articulating implementing and appraising such policy the banks proposal are subject to ratification by the federal governments.
Monetary policy measures are monetary management techniques put in place by the government through the central bank. These measures relay on the control of money stock that is supply of money in order to influence broad economic objective which include price stability high level of employment sustainable economic growth and a balance of payment equilibrium these bread objectives are achieved through the use of appropriate instruments depending on which objective the policy formulates want to achieve and also in the level of development of the economy.
In the application of monetary policy measures as instrument of economic stabilization and instrument of monetary policy are determined by the nature of the problems to the solved and by the environment in which these problems exist.
There are broadly two categories of these instruments namely indirect or market based and direct instrument indirect instrument are usually used in market based economics where the quantity of money stock can be effected through the relationship between money supply and reserve money as well s the ability of the monetary authority to influence the creation of reserves. The reserves and money supply can be affected through the following ways:
i. Change in reserves/ deposit ration
ii. Change in discount rate
iii. Interest arte change
iv. Engaging in open market operations (OMO)
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Chapters: | 1 - 5 | ||
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Attributes: | Questionnaire, Data Analysis,Abstract | ||
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