ABSTRACT

The study was design to investigate the effect of monetary policy on price stability in Nigeria from the period of 1986 to 2016. The research focused on these objective. To investigate the impact of monetary policy rate on price stability in Nigeria, to ascertain the impact of liquidity ratio on price stability in Nigeria and to evaluate the effect of cash reverse ratio on price stability in Nigeria. Ordinary Least Square technique was adopted in the study and it was found that; monetary policy rate has a negative and insignificant impact on price stability in Nigeria, liquidity ratio has a negative and significant impact on price stability in Nigeria and cash reserve ratio has a negative and significant impact on price stability in Nigeria. Based on the findings, the study recommended that; Nigerian government needs to initiate and push forward effective and efficient monetary policy rate in order to adequately stabilize prices, by encouraging holistic macroeconomic growth. Central bank of Nigeria should adopt appropriate monetary policy by reducing cash reserve ratio, increasing the liquidity ratio as these will lead to reduction in consumer 's price index in Nigeria.