Analysis On Influence To Ultimate Goal Of Monetary Policy By Stock Price

This paper tries to analyze the main impact of stock price on China's price stability and economic growth. At price stability, this paper analyze the direct channel and indirect channel of the balance sheets transmission channel using Bernanke's financial accelerating factor model; At economic growth, this paper analyze China's savings rate, savings - investment conversion rate and investment efficiency by an economic growth model considering stock Price. In addition, this paper uses Granger causality test model to further test the conclusion of study analysis. Finally, this paper carried out the reasons for the conclusion of the study analysis as well as the corresponding policy recommendations.This paper shows that the stock price impact China's price stability significantly. Under the influence of bank credit, the rise in stock prices will increase the rate of inflation in short term. While in long term the rise in stock prices will decline the inflation rate. So, stock prices fluctuations will lead to price level shocks. On the other hand, the stock price plays little role on China's economic growth. The current stock market will not affect our country's saving rate and investment efficiency. Finally, this paper carried out the reasons for the conclusion of the study analysis as well as the corresponding policy recommendations.