THE IMPACT OF MONETARY POLICY ON INFLATION AND FINANCIAL STABILITY IN POST-CONFLICT IRAQ
The Iraqi economy, both monetary and real, entered a new phase after 2003, characterized by significant changes. Following Law 56 of 2004, the Central Bank of Iraq gained independence, granting it the authority to formulate monetary policy and choose appropriate implementation tools. This independence also allows the bank to develop new tools aligned with Iraq’s specific monetary policy objectives. The purpose of this paper is to examine the role of monetary policy instruments on inflation and financial stability in post-conflict Iraq. A time series of data was collected from both the World Bank’s open data system and the Central Bank of Iraq (CBI) for the period from 2003 to 2021. The results displayed that monetary policy tools, including money supply, exchange rate, and GDP growth greatly influenced financial stability and inflation control in Iraq. In addition, the study also revealed that maintaining a constant money supply growth rate might contribute to financial stability in Iraq. Finally, the study concluded that monetary tools alone might not tame Iraqi inflation and financial stability. Success hinges on government commitment to sound fiscal policies, boosting production, and restoring consumer trust, working alongside the central bank.
XII. évfolyam 2024. Special Issues 1. 8-12
DOI: 10.24387/CI.2024.1.2
