The Future Of China's Monetary Policy Intermediate Target Orientation

Giving the fact that the general price is consistently-going down, along with the increasing pressure on the economic grow .some economists begin to doubt about the intensity of the monetary policy and about the efficiency of the intermediary goal of the current monetary policy as well ,so they advocate to use the market interest rate or the inflation rate as an alternative, while in the author's point of view in this paper the goal of monetary supplies is superior to the other financial variables, and it also can play an important role as a stable adjustment in the future more sophisticated and more divers economic life in terms of its controllability, measurability, relativity, and anti-disturbance. The paper illustrates the author's idea in three parts.In the first part the paper briefly describes the general monetary policy system, and introduces the functions of the intermediary goal as well as its five necessary feature, highlighting the important role of the intermediary goal playing in the system.In the second part, first of all, the paper introduces that American experienced in establishing goal of the monetary policy system, intending to explain that the monetary policy goals, even the whole monetary policy system are established on a dynamic basis which depends on different economic developing situations and its different periods. Then considering the shift in economic and financial situation. The author stressfully compare financial variables of possibly acting as intermediary goals: monetary supplies, market interest rate and inflation rate in terms of monetary multiplier, monetary circulating velocity, and basic money etc, which tries by comparing to that the index of monetary supplies is superior to the others in terms of measurability, controllability, and anti-disturbance. Under this discussion, the paper criticizes strongly the idea of referring the inflation rate as an intermediary goal.In the third part, according to the fact of our economic development at present and in the coming period of time, to keep our stable and sound economic situation, and to avoid recession and inflation, our monetary authority should retain the monetary supplies as our intermediary goal of the monetary policy, and further improve adjustment measures in order to make our monetary system function more efficiently.