Study Of Interest Rate Transmission Mechanism Of China’s Monetary Policy

As the main policy and approach for regulating and controlling the operation of macro-economy by central bank, monetary policy plays a crucial role in the economic development. Since the90’s of last century, our China realized the monetary policy transformation from the direct-control into indirect-control gradually, established preliminarily the monetary policy indirect transmission mechanism of "the policy tools-the manipulate target-the intermediate target-the ultimate target", and came into being the transmission system of "Central Banks-Commercial Banks&other financial institutions-business people". Since this century the monetary policy effect for macroeconomic control has been highlighted increasingly. However, there are some problems such as baffled transmission mechanism, low efficiency. Therefore, that analysis and investigating kinds of reasons which affecting the monetary transmission are meaningful and valuable for dredging the monetary policy transmission channel and raising efficiency of monetary policy.This paper firstly reviews main theories of western monetary policy interest transmission, and introduces the research of China’s interest rate transmission channel. Secondly, this paper divides interest rate transmission in our country into two stages,and choose relevant economic variable and collect relevant economic data, using Johnson cointegration test, emc,Granger causality test impulse response and variance decomposition analyzes each part of the interest rate transmission channels. Finally, analyze deeply factors and reasons impacting China’s monetary policy interest rate transmission channel. Meanwhile, from the aspects of advancing the interest rate marketization innovation, and perfecting the central bank’s macroeconomic control etc., present countermeasures and suggestions for improving the effectiveness of monetary policy interest rate transmission.