The Monetary Policy–Commodities Nexus: A Survey

ABSTRACT This survey synthesizes evidence on the bidirectional links between commodity markets and monetary policy. On the commodities‐to‐policy side, we review how shocks to energy, food, and metals pass through to inflation, inflation expectations, economic activity, and financial stability in state‐dependent ways that vary by shock type, exposure, and policy regime. We complement the literature with an analysis of central‐bank speeches, showing how officials classify commodity shocks and how these framings map into policy stances. On the policy‐to‐commodities side, we organize evidence on the transmission of monetary policy to commodity markets via financial, real‐economy, and expectations channels, highlighting heterogeneity across policy instruments, commodities, and central banks. We emphasize how financialization tightens cross‐asset linkages, raises leverage and margin sensitivity, and amplifies discount‐rate and risk‐taking mechanisms. Overall, commodities are best treated as policy‐sensitive state variables, not exogenous disturbances, with implications for policy design, central bank communication, and international monetary spillovers.