Abstract: There is a normal and moderate negative correlation between financial stability and price stability, that is, a low inflation level helps to maintain a good financial stability situation. The improvement of financial stability in China can effectively reduce the level value and volatility of inflation. There is a significant non-linear correlation between the financial stability index and the price index in China, and the intensity of the impact and the size of the fluctuation are significantly different, which shows that China should consider the financial stability when maintaining the price stability, and the influencing factors of inflation should also be added in the financial system reform.

Key words: financial stability; price stability; monetary policy