The impact of monetarypolicy on inflation in Iraq for the period (2004-2018) analytical study

Monetary policy is one of the most important policy tools used in many countries of the world, including Iraq, in formulating effective policies controlling variables of money supply, exchange and interest rates which must be directly effectual on inflation. In Iraq, the economy, in both its real and monetary aspects have witnessed a new phase after 2004 during which many significant changes occurred most notably Iraqi Central Bank's acquisition of independence by Law No.56 in 2004 for designing monetary policy and identifying appropriate tools for its implementation, as well as developing new tools which are in line with the objectives of the monetary policy guidelines in Iraq most importantly price stability, the appreciation of the Iraqi Dinar and controlling inflation rates which decreased from 27% in 2004 to 0.4% in 2018. Accordingly, this led to stability in exchange rates and the general level of prices. Hence, one of the most important findings of the econometric study in which the (ARDL) model was used for measuring and analyzing the impact of the monetary policy in moderating inflation in Iraq during the period 2004-2018 is: the existence of a significant positive effect of the exchange rate at a (0.05) level of significance and the presence of a significant negative effect of the money supply on inflation at a (0.01) level of significance. Also, the results of the long-term response show the existence of an insignificant negative effect between interest rate variable and inflation in Iraq. Also among the most important results, is a decrease in inflation rates in the Iraqi economy for the period (2008-2018) because of the Iraqi Central Bank's intervention in controlling the money supply and determining its expansion. The researcher has reached several recommendations, the most important of which are: - Emphasizing on the importance of the gradual domestic interest rates' liberalization starting with such liberalization between the Central Bank and the commercial banks in a consistent way with acceptable inflation rates. - Continuing of confronting and targeting inflation phenomenon through the exchange rate adopted by the Central Bank in targeting inflation. Keywords: Monetary policy, Inflation, The impact of monetary policy on inflation in Iraq