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This research addresses the interrelationship between financial markets and monetary policy, reviewing the impact of fluctuations in financial markets on the economic decisions taken by central banks. Financial markets are considered one of the most important tools through which monetary policies can be transmitted to the economy, as fluctuations in stocks, bonds and interest rates affect investment and savings decisions. The research shows how these fluctuations affect inflation rates and economic growth, highlighting central banks' crucial role in controlling liquidity and preventing financial crises. It also discusses how monetary tools such as interest rates and open market operations achieve economic stability. The research highlights that financial markets can act as a channel for transmitting monetary policy. Still, at the same time, they may complicate the economic decision-making process due to unexpected fluctuations. There is also a strong interaction between financial markets and monetary policy, which requires integrated strategies to achieve macroeconomic stability.
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Dhuha Dhulfiqar Ali AL-Obaidi (2025) studied this question.
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