Abstract
The article is devoted to topical issues of the impact of the central bank's monetary policy on the economy, including its financial sector (financial markets) and inflation through the transmission mechanism. Its purpose is to study the essence and the effectiveness of the implementation of the monetary policy of the central bank from the point of view of its impact on inflation and the development of the financial market in Ukraine. Attention is focused on the wide use of inflation targeting policy and its components in the world. The transmission mechanism of the influence of monetary policy on the economy and inflation is considered. The approaches to the transmission mechanism of monetary policy and its main channels through which it affects the activation of the functioning of the financial market, the economy and inflation is considered. It is noted that the main channel for the transmission of monetary policy in Ukraine is the interest rate channel. Its action is based on changes in interest rates. Such changes contribute to a wider placement and attraction of funds by business entities. As a result of effective placement and attraction of funds, they can solve the issues of consumption, accumulation and investment. Thus, they affect the level of aggregate demand, economic activity, the development of financial markets and inflation. Statistics from the central bank of Ukraine confirm the effectiveness of the transmission mechanism of its monetary policy in resuming the development of the financial market and controlling inflation. The "de-dollarization" of loans and deposits has been steadily progressing in Ukraine in recent years. It contributes to weakening the influence of external factors on the domestic financial sector and increases the importance of domestic interest rates in decision-making by households and enterprises. The continuation of this trend in the future, which will be facilitated, among other things, by maintaining price and financial stability, will have a positive impact on the effectiveness of the monetary policy transmission mechanism. At the same time, it was concluded that it is necessary to take into account non-monetary factors influencing inflation and take them into account in changing the operating procedure of monetary policy. This will effectively limit the impact of the changing liquidity situation in the banking sector on the cost of resources in the financial market, and therefore on all other rates in the economy.
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