The Impact Of Monetary Policy On Stock Price Fluctuations

With the rapid development of China’s stock market, the relationship between the stock market and the entity economy is much closer. On the one hand, the stock market has become an important channel for monetary policy, On the other hand, the volatility of stock price has had a profound impact on macroeconomic, challenging the target of monetary policy. So, it’s important to research the impact of monetary policy on stock price fluctuations. This not only helps investors make judgments on the stock price based on the monetary policy, but also helps to improve the efficiency of transmission of monetary policy, but also related to the formulation of monetary policy. In this thesis, I mainly study the effect of Chinese monetary policy on stock price in the theoretical and empirical way. I make some conclusions:Monetary policy has a certain impact on the stock price fluctuations, but the overall effect was not significant, it’s still insufficient for China’s stock market as the transmission channel of monetary policy; both the narrow money supply and the broad money supply have little effect on the Shanghai composite index, Broad money supply (M2) effect on stock price is stronger than the narrow money supply (M1);Compared to money supply, interest rates have a greater impact on the stock price volatility; So, Monetary policy should be based on interest rates as the main regulatory tools, at the same time, the central bank should concern about the broad money supply (M2).