Transmission Mechanism of Monetary Policy Decisions and the Effects on the Real Economy

Abstract

The article tackles the role of monetary policy in the context of instabilities happening in the economy over the last years. The major objective of central banks is to provide price stability, thus, maintaining a stable economic framework is their main concern. This issue is particularly important nowadays as countries have been facing multiple economic crises, which have caused waves of uncertainty and emphasized economic vulnerability. Namely for this reason, there are more and more studies that analyse the effect of monetary policy decisions on prices and economic growth (GDP growth). Practice shows that different monetary policy transmission mechanisms are necessary to reach all economic peculiarities of every country.