Brief Introduction

Monetary Policy refers to the mechanism for regulating the value, supper and cost of money at optimum levels that will ensure the attainment of desired national economic objectives which include price stability, sustainable output, employment growth, and external viability it encompasses actions designed to manage the growth of money supply during a period of his optional target.

The monetary policy strategy for the achievement of these goals in any economy is often influenced by the stage of development of the economy and its financial infrastructure. when the monetary policy strategy is successful, the level of money becomes compatible with the rate of growth of output inflation and interest rate.

Money at this level plays the role of an efficient lubricant of the wheel of economic activities in such a way that it will not constitute a nuisance to the extent that its supply will be too much or first-rate business intentions to that extent that its supply will not be enough. There are two main monetary policy strategies, which are direct and indirect approaches.