Abstract
Effective monetary policy re relies on the central bank's capacity to convey its policy signals
effectively to the financial system. Based on the period between 2010 and 2025, this research
examines the Nigeria's Interest Rate Corridor (IRC) framework's effect on the money market
rates. Using monthly secondary data and the Autoregressive Distributed Lag (ARDL) model, it
evaluates the short-run and long-run effects of the Monetary Policy Rate (MPR) and Standing
Lending Facility (SLF) on the Open Buy Back (OBB) rate, providing evidence on the
effectiveness of the IRC in monetary policy transmission. The Standing Deposit Facility (SDF)
was excluded due to perfect multicollinearity with the MPR. The findings confirm that the MPR
is the primary anchor, exerting a significant positive long-run effect (pass-through coefficient of
0.71) on money market rates. The SLF rate also has a significant, albeit weaker, positive
influence, confirming its role as a functional but secondary ceiling. The error correction
mechanism reveals a reasonably quick adjustment speed, with 27.7% of disequilibrium corrected
monthly. The study concludes that while the IRC framework is operative, transmission is
incomplete due to structural factors like discretionary Cash Reserve Requirement (CRR) debits
and persistent liquidity surpluses. We recommend enhancing liquidity management and
strengthening the operational roles of standing facilities to improve policy transmission.