Abstract: This paper analyzes the impact of central bank’s behavior characteristics and institutional characteristics on the credibility of monetary policy, and the relationship between these two factors; then evaluates the independence and transparency of China's central bank and compares the independence and transparency of China's central bank with those of other countries’ central banks; at last analyzes the path of institutional reform to enhance the credibility of monetary policy in China.

Key words: inflation, credibility, central bank independence, central bank transparency