OPEN MARKET OPERATION AND PRICE STABILITY IN NIGERIA

This study empirically examined the effect of open market operation on price stability in Nigeria. The study covered a period from 1990 and 2022. The proxies of open market operation (independent variable) were treasury certificates, Treasury bill rate, commercial papers, and eligible development loan stock. The proxies of price stability (dependent variable) were the consumer price index. This analysis employed annual time series data obtained from the Central Bank of Nigeria (CBN) Statistical Bulletin. As data analysis techniques, the study implemented a variety of econometric methods, comprising Bounds co-integration, Augmented Dickey Fuller (ADF) unit root statistics, and Autoregressive Distributed Lag (ARDL). The upshots of this study suggest that the consumer price index in Nigeria is unfavourably and substantially swayed by the Treasury bill rate and eligible development loan stock. The CPI in Nigeria is favourably and substantially swayed by commercial papers, while the CPI in Nigeria is unfavourably and non-substantially swayed by treasury certificates. In Nigeria, the study determined that open market operation variables have substantial impacts on price stability. The study suggested that the CBN should strategically allocate credit to critical productive  sectors of the economy, comprising agriculture and manufacturing, through the strategic use of eligible development loan inventories. This approach has the potential to stabilise prices by augmenting the supply of goods and services. To achieve this, it is necessary to allocate loans to initiatives that directly reduce the cost of essential products and services.