[01] Yunana Titus Wuyah, Department of Economics and Management Science, Faculty of Social and Management Sciences, Nigeria Police Academy, Wudil, Kano, Nigeria. [02] Amba Daniel Amwe, Department of Demographic and Social Statistics, National Bureau of Statistics, National Headquarters, Abuja, Nigeria.

The paper examined the implication of money supply on interest rate in Nigeria for the period of sixteen years (2000-2016) using multiple regression model. Ordinary least squared was used in estimating the regression model. We first test for the presence or non-presence of unit root on the variables. The unit root result showed that that all the variables were stationary after the first difference. The OLS result showed that money supply and exchange rate have negative implication on interest rate while inflation rate has positive implication. The regression model is a good fit as the coefficient of determination showed that 76% of the variation in interest rate is explained by all the explanatory variables (money supply, inflation rate and exchange rate). The t-value also indicated that both money supply and exchange rate has significant influence on interest rate. We therefore recommend increase in money supply into the economy which will consequently reduce interest rate, increase investment and boost economic growth in the Country. The monetary authorities (Central Bank of Nigeria) should pay special attention on broad money supply (M2) by manipulating instruments like the liquidity ratio, reserve ratio, among others which directly affects the monetary aggregate M2 for managing the economy.

Money Supply, Interest Rate, Inflation Rate, Exchange Rate, Central Bank

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