Economists and politicians advocate in recent years that stabilization of output and inflation should be left to monetary policy and the long-run primary goal for central banks should be the price stability. While achieving this goal, monetary authorities must have a clear understanding of the timing and effect of their policies on the economy, thus a clear understanding of the transmission mechanism of the monetary policy. The purpose of this paper is to analyze the evolution of the efficient monetary policy concept and its transmission mechanism using synthesis method. The main conclusions of the paper refer to results of recent researches and analyses that prove the important role of a sound understanding of monetary policy transmission mechanisms in order to maintain price stability. Effectiveness of monetary policy can be traced through changes in money market conditions that initially affect financial markets as reflected in asset prices and general liquidity and credit conditions, changes that in turn affect spending and prices.