This “study examined the effect of monetary policy rate on the performance of commercial banks in Nigeria, during the period 1994 to 2024. The specific objectives of the study were to investigate the impact of monetary policy rate (MPR) on the performance of deposit money banks (DMBs) in Nigeria, examine the influence of exchange rate on performance of (DMBs) and lastly, analyze the effect of inflation rate on performance of (DMBs). Banks Return on Investment (BROI) was the dependent variable, which served as proxy for performance of deposit money banks in Nigeria. The explanatory variables included monetary policy rate, exchange rate, and inflation rate. Secondary data collated from the Central Bank of Nigeria (CBN) Statistical Bulletin, were used for the study. The study utilized the Autoregressive Distributed Lag (ARDL) econometric technique for data analysis. The empirical findings revealed that monetary policy rate has a positive and statistically significant relationship with return on investment of deposit money banks in Nigeria, both at the level form and first lag. Inflation rate has positive and statistically significant relationship with banks` return on investment in the level form, but negative and statistically insignificant relationship in the first lag. Exchange rate has positive and significant relationship with the dependent variable (BROI) at the level form, but negative and significant relationship at first lag. The F- statistic value and its probability value, showed that on the overall, the explanatory variables were statistically significant.

Based on the results, the study concluded that monetary policy rate (MPR), exchange rate policies, and inflation rate exert significant influence on the performance of deposit money banks in the country. Consequently, the study recommends that monetary authorities, particularly the Central Bank of Nigeria, should maintain the monetary policy rate at a level that promotes optimal performance of deposit money banks. It further suggests that monetary authorities should collaborate with fiscal authorities to design an appropriate policy mix aimed at stabilizing and reducing exchange rate volatility in Nigeria. The study also recommends that, policymakers should implement policies that ensure price stability by effectively managing and controlling inflation rate in the country.