Research On The Intermediate Aim Of Monetary Policy At The Present Period

The choice of intermediate aim is crucial to a effective monetary policy regime. In 1996, MI and M2 was used as the adjust aim of monetary policy. This was the beginning that money supply volume was used as the intermediate aim of monetary policy. The deflation of Chinese economy recent years breeds different opinion on the effect of monetary policy. Different voice on the effectiveness of monetary supply and the choice of intermediate aim of Chinese monetary policy arise. With the new financial situation after China enter WTO, it is important to estimate the intermediate aim of monetary policy used now and make realistic institution arrangement .This article discuss the opinion with six parts of documents review, summarizes of intermediate aim of monetary policy, several main intermediate aims, inflation targeting and its usage to China, the analysis of money supply volume and the choice of intermediate aim of monetary policy during transition.Chapter One is documents review .The part of documents review includes the research development of the analysis of the advantage and disadvantage of several main intermediate aims, the kinds of inflation targeting and its practical effect, the analysis of inflation targeting, the analysis of the correlation of money supply volume and the choice of intermediate aim of China.Chapter Two is the definition of intermediate aim of monetary policy and the standard of choosing intermediary.Chapter Three is several main monetary policy regimes .According to the choice of intermediate aim, there are five main monetary policy regimes: exchange-rate targeting , monetary targeting, interest rate targeting, inflation targeting and monetary policy with an implicit but not an explicit nominal anchor. The choice of intermediate aim is a developing process. Not only is it the result of the development of financial theory, but also is it the product of the financial realities of the country. On one hand, this five monetary policy regimes have their own advantage and disadvantage, on the other hand, there exists a relationship of substitute and development between them. Some monetary intermediate aim will be substitute by other intermediate aim and inflation targeting is likely to be a mainly monetary policy regime in the future. But no what the advantage and disadvantage, the economic and financial realities still determine the choice of intermediate aim of monetary policy.Chapter Four is inflation targeting and its usage to China. The basic meaning ofinflation targeting is that monetary department forecast the future inflation and compare it with the target. According to the difference between them, the monetary department uses all of the monetary instruments it can use to make the inflation which will realize in the future approach to the target. Since the adoption by New Zealand in 1990, there have been 19 countries adopt inflation targeting by the end of 2000, and many more are considering future adoption of this new monetary framework, including developed and developing countries. This show its some suitable. The practical effect of inflation targeting is success in increasing transparency and credibility of monetary policy , increasing the independence of central bank, reducing and guiding inflation expectation. Still ten years is not long enough to give a wholesome and explicit judge to inflation targeting. A subjective judge is: the first analysis of the practice of inflation targeting shows inflation targeting a successful monetary policy regime. There need some economic and financial situation , law situational market situation for the successful run of inflation targeting. Because of the problem of the aim of monetary policy, the forecast of inflation rate, the self-control problem of monetary policy, the instruments of monetary policy and the conduct of monetary policy, inflation targeting does not suit China now, so does monetary policy with an implicit but not an explicit nominal anchor.Chapter Five is the analysis of monetary targeting in China. To consider...