Monetary policy manipulation by the Central Bank of Nigeria and its implication in achieving sustainable economic development in Nigeria by the year 2030

The objective of this paper is to discuss inflation target policy thrust using Taylor's rule to analyze the impact of interest rate fluctuation on the actualization of Sustainable Economic Development goal in Nigeria by the year 2030. The writers used the Generalized Method of Moments (GMM) estimator to estimate the forward looking Taylor rule with interest rate smoothening. Data covering quarters 1 - 4 between 2006 and 2013 were obtained with 32 observations in total. The model for the study is the forward looking Taylor's rule. The findings of the study shows that, the inflation co-efficient (β=0.47) is statistically significant while the co-efficient of the out-put gap (λ =-0.10) is negative but statistically insignificant for backward - looking reaction function. while for forward looking reaction function inflation co-efficient (β = 0.47) shows that a one percent point (p.p) rise in expected annual inflation induces the CBN to raise interest rate by less than half p.p Meaning that CBN do accommodate inflation shocks. This does not follow the Taylor's rule. It is thus recommended that; government should ensure that there are constant changes in exogenous variables on the demand side of the economy; keep inflation close to its target rate and avoid large output gap; Nigerians at large need to imbibe consumption smoothening behavior.