Analysis of the influence of monetary policy on stock market

Monetary policy is also an important part of the national macroeconomic policy, and also serves to promote the stable development of economy. It refers to a policy means that the central bank adjusts the relevant variables by using the interest rate, exchange rate, credit, currency issue and foreign exchange management tools it has mastered, and finally affects the whole national economic activities. Like the financial policy, monetary policy also reflects the government's management of national economic and financial resources, but this part of financial resources mainly refers to the financial resources represented by bank credit. In addition, monetary policy does not reflect the distribution and management of some social products as the fiscal policy. Therefore, monetary policy and fiscal policy have the same and different points.

① Monetary policy objectives. Monetary policy goal is also called the ultimate goal of policy, which refers to the ultimate goal to be achieved by monetary policy regulation. The formation of monetary policy objectives has been a long time, from the initial stable price to the four goals that are generally recognized by all countries in the world: stable prices, full employment, moderate economic growth and balance of payments. As mentioned above, these four goals are also the main contents of the financial policy objectives. It has been explained earlier, and it will not be repeated here.
② The intermediate objective of monetary policy. Monetary policy is an indirect regulation of economic operation, which can not directly affect the actual economic activities, but must achieve its ultimate goal through a certain intermediate goal. Therefore, we must select a certain intermediate goal as the direct adjustment purpose of monetary policy, and also take these intermediate variables as indicators reflecting the effect of monetary policy operation. The intermediate goal is a very important transmission link in the whole monetary policy implementation process.
The middle goal of monetary policy must adhere to certain principles, that is, a suitable intermediate goal must be closely related to the final goal of monetary policy, namely, the stability of national income, and can be controlled by the central bank, and can quickly play a role in declaring the intention of monetary policy. At present, the most influential intermediate targets proposed by countries are interest rate, money supply, total loan, currency base, stock price, etc., but only three items, such as interest rate, money supply and total loan, are generally accepted. These three indicators can better reflect the above principles, and have a good adaptability with the economic system and financial system, so they are widely used in the operation of monetary policy. The knowledge of interest rates will be presented in the next section, which will briefly talk about money supply and total loans.
First, money supply. The most fundamental goal of monetary policy can be attributed to providing a good monetary environment for the economic development of a country. Under the condition of modern credit standard, the change of money supply will have a direct impact on the balance between the total supply and the total social demand, and thus affect the operation of the whole macro economy. Therefore, in order to make the supply of money not the root cause of major economic fluctuation and not destroy the normal operation of the whole national economy, monetary policy must be formulated according to the overall supply and demand of the society. One of the important tasks of monetary policy is to maintain a moderate supply of money, and not to cause excessive prosperity or long-term recession of economy due to excessive or insufficient currency.
The so-called moderate money supply has both quantity and quality requirements, which is mainly reflected in the following aspects: first, in the case of insufficient total social demand. At this time, the whole social economy is in a recession or depression, with a large number of idle resources, insufficient start-up of enterprises and stagnation of social and economic development. At this time, the monetary policy of the central bank should be expansionary, that is, to increase the money supply to stimulate the increase of total demand, so as to promote the recovery and development of production and to promote the balance of social supply and demand.
Second, in the case of excessive total social demand. At this time, the macro-economy is in an overheating state, with rapid development of production, sharp increase in investment, insufficient market supply, too much money chasing too few commodities, and rising prices. At this time, the central bank's monetary policy should be tight, namely, reducing the money supply, restraining the total social demand, promoting moderate and stable economic growth and promoting the balance of social total supply and demand.
Third, the total supply of society and the composition of total demand are not suitable for the situation. At this time, the macro-economy is in such a situation: some departments are in short demand, the commodities are relatively surplus, and production is stagnant; others are in excess demand, the supply of commodities is short of demand, the price rises, and the production develops rapidly. The result will be the imbalance of the overall economic proportion and the abnormal development. At this time, monetary policy should be tight, loose and combined. By adjusting the composition and flow direction of monetary supply, the paper changes the situation that the composition of social total demand is not suitable for the composition of total supply, and promotes the balance of total supply and demand not only in quantity but also in structure, so as to ensure the coordinated development of national economy.