Abstract: The effectiveness of monetary policy is closely related to the stability of the macro economy. Therefore, a thorough discussion of the effectiveness of monetary policy is of great significance for achieving China's economical goal of stable growth. By constructing a three-period model incorporating the banking and enterprise sectors, this paper studies the intrinsic relationship between signal effect, economic uncertainty, and the effectiveness of monetary policy, and conducts empirical tests using the instrumental variable partial projection method. The findings show that, first, there exists a signal effect of monetary policy in China, and the monetary policy released by the central bank will affect the public expectations of the economic fundamentals, thus influencing the effectiveness of monetary policy. Second, the loose monetary policy can stimulate economic growth by extending the credit term, however, the existence of the signal effect will weaken the effect of monetary policy on regulating the credit term structure, further reducing the effectiveness of monetary policy. Third, when economic uncertainty intensifies, the signal effect will be amplified, which will further weaken the ability of monetary policy to regulate the credit term structure and reduce its role in stabilizing the economy. Therefore, the People's Bank of China should improve its expectation management, increase public confidence in the effectiveness of monetary policy, and at the same time unblock the regulatory channels of monetary policy's credit term structure, especially in the context of higher economic uncertainty.

Key words: signaling effects, economic uncertainty, effectiveness of monetary policy