The Effectiveness Of Monetary Policy In Controlling Inflation In The Gambia

This study empirically examines the effectiveness of monetary policy in controlling inflation in The Gambia.The study used inflation as the dependent variable,money supply,interest rate,other potential determinants of inflation which include the exchange rate and GDP as the independent variable.Annual data from 1971-2017 were used.Multiple linear regression model using ordinary least square estimation was used in determining the relationship between the independent and the dependent variables.The empirical result shows that inflation is not a monetary phenomenon.The coefficient of money supply and interest rate is positive but statistically insignificant at 5% level in explaining changes in inflation rate in The Gambia.The coefficient for GDP and exchange rate are also positive and statistically insignificant at 5% level.The study recommends that policy makers in The Gambia should not only use monetary policy but should combine monetary policy with fiscal policy and other non-monetary measures to effectively control inflation.