Volume 2 - Issue 2, March - April 2026

This research examined the aspect of monetary policy versus inflation targeting in the Nigerian economy between 1986 and 2024. The nagging inability of Nigeria to get to achieve a sustained price stability despite the active intervention in monetary policies constitutes the backbone of motivation that motivates this study. The general aim is to look into the effects of chosen monetary policy instruments, such as the monetary policy rate, cash reserve ratio, and liquidity ratio, on inflation targeting that is measured as inflation rate. The foundations of the study is based on the Quantity Theory of Money, Keynesian Theory of Monetary Policy and Monetarist Theory of Inflation. An ex post facto research design was adopted to steer the research work under the positivist research philosophy. Data were taken from Central Bank of Nigeria Statistical Bulletin, World Development Indicators. Descriptive statistics, Augmented Dickey-Fuller unit root tests, Johansen co-integration and parsimonious error correction model were used for the analyses at 5 percent level of significance. The results show a positive and significant relationship between the monetary policy rate and inflation and other financial variables, cash reserve ratio and liquidity ratio were found to have no effect. The study concluded that monetary policy effectiveness in the area of inflation targeting is limited by structural and transmission issues. It recommended for an increased policy coordination and a move towards fixing the supply side drivers of inflation. The contribution of the study to knowledge is that it has updated empirical evidence regarding inflation targeting and the effectiveness of monetary policy in Nigeria.

KENIYINBOH, Adimiegha BobR,"Monetary Policy and Inflation Targeting in The Nigerian Economy" International Journal of Advanced Multidisciplinary Research and Educational Development, V2(2): Page(612-623) Mar-Apr 2026. ISSN: 3107-6513. www.ijamred.com. Published by Scientific and Academic Research Publishing.