ABSTRACT

 The study analyzed the impact of monelary policy instrument on Nigerian economic stability within the period of 1981 to 2018. The objectives of the study were to examine the impact of monetary policy on economic stability in Nigeria and to ascertain the long run relationship between monetary policy and economic stability in Nigeria. The study employ ex-post facto research design. Ordinary least Square regression technique and Johansen co-integration test were used in the research. Thus revealed that; money supply has a positive and significant impact on economic stability in Nigeria, exchange rate has a negative and significant impact on economic stability in Nigeria while interest rate and cash reserve ratio have a negative but insignificant impact on economic stability in Nigeria. Also there exist a long nm relationship between monetary policy and economic stability in Nigeria. From the result of the findings, the study recommended that; since: money supply impacted positively. There is need to used expansionary monetary policy to increase the circulation of money in the economic. There is the need to promote low and stable exchange rate which has the capacity of increasing the circulation of money directly and stimulating economic stability indirectly. Central bank of Nigeria should adopt appropriate monetary policy capable of reducing cash reserve ratio in Nigeriu. Monetury a11tlumties should pursue policies that aim to reduce interest rate on the economy. This will help reduce the level of uncertainty in the economy while at the same time boosting investors' confidence and ensuring accelerated ecunom,c stability.