A Research And Suggestion On China's Selection Of The Intermediate Targets For Monetary Policy

Intermediate targets for monetary policy is in a very critical position in the monetary policy transmission mechanism, the choice and revision of it straightly decides evaluation on monetary policy's effect, so it is the crux for central bank to make monetary policy. Our central bank chose money supply as the intermediate target, but it hasn't reacted well: money supply increased slowly, residential investment and consumption were not increase with high effect. So what is the trend of our country's intermediate target of monetary policy? This is the problem the thesis deals with.This thesis discusses the choosing standard and theory of intermediate targets for monetary policy, and then through investigating the choosing practice of it in America since the World WarⅡ, the author analyzes the theoretical and practice in the choice of intermediate target. During the research of our country's intermediate target, the thesis analyzes and evaluates the current intermediate target, it is clear that the applicability of the monetary aggregates is lower and lower; it's not suitable to be used as our country's intermediate target. As for the interest rates, the author demonstrates that: in China, the interest rates have weak relationship with the whole economy, and aren't available to be controlled; so interest rates can't be used as our country's intermediate target either. Meanwhile, China doesn't provide the suitable economic situation for inflation targeting system. At last, on the basis of analysis, the thesis comes up the suggestion: as there is no perfect choice, our country should abandon monetary aggregates, without declaring the intermediate target, try to found the inflation targeting frame and control the price into suitable range; that means recessive inflation targeting just as America's.