| After the notes, inflation has been one of the focus issues studied by the economists .As a universal and complex macroeconomic phenomenon in the global , inflation has impact on many macro-economic indicators including output, consumption, economic well-being and effective allocation of resources and so on. Inflation is one of the core factors concerning the development of one country and the main objectives to the macro-economic regulation and control especially monetary policy. Every is committed to remaining the inflation rate lower and stable, which is Conducive to economic development.There are many factors resulting in the short-term wave of the price. However, from the long-term, it is only excess liquidity that causes the inflation and makes excessive money chase limited commodities ,which is just the reason that leading to inflation. Therefore, the excessive mobility that is super-currency is a requirement for the inflation while monetary policy is the most direct and effective means of control. So, in theory, monetary policy can hold the inflation rate be at a stable and lower level.Based on the existing theory, combining the current situation of monetary policy, liquidity and inflation in China, the paper empirically analyses the relationship between the mobility and inflation as well as monetary policy and the mobility. According the above analysis, the paper specifically analyses the effect of liquidity control by the monetary policy. The results shows that the mobility in China has not fully reflected in inflation in result of structural surplus of liquidity and the control of the interest rate policy for the mobility is counter-productive because of the inadequate market mechanism. The appreciation of RMB aggravated excess liquidity while the deposit reserve ratio and open market operations effectively control the mobility. Finally, the paper proposes some hopeful suggestion to control the mobility and inflation from the monetary policy. |
