The paper uses a FAVAR model to study how different economic factors in Nigeria respond to changes in monetary policy. This model combines factor analysis with the standard VAR approach to better understand how monetary policy affects the economy. By looking at a wide range of variables, including real activity, inflation, interest rates, financial markets, and money and credit, the researchers were able to see a clearer picture of how monetary policy impacts the Nigerian economy. The results show that the FAVAR methodology is crucial for identifying how monetary policy influences the economy in Nigeria.