The Relationship between Nominal Interest Rates and Inflation: New Evidence and

* E-mail of the corresponding author: This paper investigates the relationship between expe extent to which the Fisher effect hypothesis holds, subtracting the expected inflation rate from the nominal interest rate. For the resultant ex ante real interest rate should be stationary. Correction Mechanism, our findings tend to suggest: (i) interest rates and expected inflation move together in the long run but not on one full Fisher hypothesis does not hold but there is a very strong Fisher effect in the case of Nigeria over the period under study (iii) that causality run strictly from expected inflation to nominal interest rates as suggested by the Fisher hypothesis and there is no “reverse causation ” (iv) that only about 16 percent of the disequilibrium between long term and short term interest rate is c partial Fisher effect in Nigeria, is that the level of actual inflation should become the central target variable of the monetary policy