Monetary policy rate, interest rates, principal component regression, ridge regression


The objective of this study is to find out whether changes in Monetary Policy Rate have any impact on interest rates in Nigeria. The study adopted Multiple Linear Regression Analysis to examine the effectiveness of changes in Monetary Policy Rate on movement in short term and long term rates in Nigeria. The study concludes that the MPR influences the 91-Day Treasury Bills rate to the greatest extent followed by the Inter-Bank Call rate. The results obtained from this study can be used to gauge the effectiveness of MPR in an economy like Nigeria where financial infrastructure is not fully developed.

Author Bio

The authors are staff of the Statistics Department, Central Bank of Nigeria.

Publication Title

CBN Bullion







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