Through the instrument used in monetary policy help us by the control of inflation in an economy. This to know the control of inflation using central bank of Sierra Leone monetary policy. Hence, this research work was focused on the investigation of the control of inflation by using central bank of Sierra Leone monetary policy. In carrying out this study, various research instruments such as questionnaires and oral interviews were used to collect data from respondents. The research design and methodology secondary data was collected from central bank of Sierra Leone bullion. Location of data and this was stated in chapter three (3) of the research work from the data collected and stated it was found out that of the control of inflation using BSL monetary policy. The government should establish firms in the economy to reduce the rate of inflation and opening market operation. Recommendations were made in chapter five shows that in order to prevent through currency devaluation, Sierra Leoneans should use in manufacturing capacity labour and skill to take advantage of export opportunity that are created in international market. The introduction of the structural adjustment programme (SAP), in Sierra Leone had with it seen the need for efficient and effective management of a firm’s scarce resource, and for this to be effective.

CHAPTER ONE

INTRODUCTION

BACKGROUND OF THE STUDY

After an appreciated economic performance in the early 1970s, the Sierra Leonen economy experienced serious economic problems from late 1970s to mid 1980s the country’s balance of payment came under severe pressure and was in persistent deficit during the period. the government’s current expenditure expanded without an appreciable increase in revenue, leading to widening fiscal deficits, which were largely financial with bank credit with adverse consequences on the general price level. The inflationary pressure further appreciated by high demand of imports and both intermediate inputs and consumer goods due to over valuation of the Leones, which made imports relatively larger than locally manufactured good, (Ahmed, 1992).

In addressing the crisis, a number of policy measures regularly demand government embarked upon management. In April 1982, the federal government enacted the economic stabilization measured, which dealt extensively on import restriction as well as monetary and fiscal policies. The effectiveness of this measures were constrained by the continued decline in foreign exchange earnings, the over valuation of Leones and other distortions and liquidities in the economy, (Ahmed, 1992).

As the demand pressure movement at the inter-foreign exchange market (IFEM), the exchange rate of the Leones came under renewed pressured in spite of BSL’s determination to fund the growing demand for foreign exchange.

This study is being carried out to know the different BSL credit instruments and their effectiveness in inflationary control.

STATEMENT OF THE PROBLEM

This research project is designed to investigate inflation control through the use of monetary policy. There have been various efforts by the government to combat inflation in the country. But in spite of all these efforts being made, inflation is said to be alarming in the country. Sierra Leonen industries as well as individuals are groaning under the crusting effect of inflation. What the causes of the phenomenon, what measures are taken so far to combat the situation, are credit instrument of BSL effective or ineffective in controlling inflation? (Ozo, et al 1999).

OBJECTIVES OF THE STUDY

1.    To find out whether currency devaluation is a cause of inflation.

2.    To find out the extent to which inflation has effected the economy.

3. To determine the effectiveness of open market operations as a tool for inflation control.

4.    To identify the adverse effect of inflation on economic growth.

5. To recommend measures for effective control of inflation through monetary measures.

RESEARCH QUESTION

1.    Is currency devaluation a cause of inflation?

2.    To what extent has inflation affected the economy?

3. What is the effectiveness of open market operation as a tool for inflation control?

SIGNIFICANCE OF THE STUDY

The study is very timely, today that inflation trends is at an alarming rate in Sierra Leonen economy. This study will be of immense benefit to the government and experts and students to determine the extent of the effect now of BSL monetary policy as a tool of inflation control. In addition, the study will determine the facts or problem limiting the effectiveness of these instruments. It is expected that the findings will help to bridge any gap that may exist and to make this instruments effective in inflation control (Ozo et al 1999). The government achieved its objectives in economic growth and stability through inflation control we will help the government to know whether to pump money into the economy or not.