Monetary Policy amidst COVID – 19 Pandemic in Nigeria

Abstract

This study examined the effectiveness of monetary policy on economic growth in Nigeria within the COVID-19 period spanning from  December 2019 to October 2020. Three most adjusted monetary policy instruments were employed: the monetary policy rate, the  exchange rate and broad money supply, which were made the explanatory variables. The growth rate stood as the dependent variable. Granger Causality and Vector Auto-Regressive (VAR) were employed for the analysis as informed by the unit root tests. It was found that,  when applied individually, monetary policy rate and exchange rate granger caused economic growth while braod money supply did not.  When jointly used, all three variables granger caused economic growth. Also, It was found that, monetary policy rate and exchange rate  have significant impact on economic growth while broad money supply could not have any significant impact amidst the COVID-19  Pandemic period.This study therefore, suggests that, the monetary authorities could use the instruments of monetary policy rate and  exchange rate to motivate economic growth amidst pandemic periods like this.More so, pumping out money can only have significant  impact when the use of such money is guided for the intervention purpose only. If not, it could end up causing serious inflation.