This study is designed to find out the overall effectiveness of monetary policies in promoting economic development in Nigeria. The unique characteristics of policy tools are highlighted, so also the problems Associated with their implementation. From the analysis, it was discovered that most of the policy tools are either not properly implemented or not properly chosen, as they cannot adequately take care of the economic problems on the ground. This is because statistical data required for policy setting are either received very late or unreliable from main operators which are banks and other financial institutions, so also government budgets deficits financed through borrowings. It was concluded therefore that for the tools to be effective; (1) Data should be realistic, reliable and timely received by the policy makers. (2) There should be proper harmonization of fiscal and monetary policies to reduce yearly budget deficits which are mainly due to lack of coordination between fiscal and monetary programs. (3) CBN should undertake deliberate strategy for rebuilding confidence in the banking industry. (4) There should be due attention given to timing sequencing, appropriateness and complementariness of policy choices to make them more effective.