The Impact of Monetary Policy Decisions on Financial Market Indicators

The paper provides the analysis of interconnection between monetary policy conducted by the Central Bank of the Russian Federation and financial markets. In this paper some theoretical aspects of monetary policy, Russian monetary policy implementation under the inflation targeting regime and the most important channels of the monetary policy transmission mechanism were described. Besides, in this paper the author makes an attempt to assess the impact of the key rate and interbank loans rates on lending and deposit rates of Russian banks. In addition, the reaction of stock market participants to the decisions made by the Bank of Russia regarding key rate was examined. As a result, the author found a strong performance of interest rate pass-through and a relatively weak link between central bank decisions and stock index value.