Inflation Targeting With The Choice Of China's Monetary Policy Intermediate Target

Intermediate aims are the meeting and transmission point of central bank monetary policy, which generate influencing about magnificent economy under market economy and plays a vital role in regulation of monetary policy. Choose and revise intermediate aims are one of pivotal steps in monetary policies. Concerning on monetary policy's effects directly, it is vital for the Monetary Beau to choose suitable intermediate targets. There is deep theoretical significance and wide practical value in researching intermediate targets' choice and developing trend. Recently, the effects of money supply as the intermediate target become weaker. The trend of financial innovations and financial deregulation have challenged on the criterion of the traditional intermediate targets - relevance, controllability and measurability. The key content of this dissertation is to study the inflation targeting and the arrangement of intermediate targets of monetary policy in China.Chapter 1 lies the function of intermediate target of monetary policy, announcing the importance of the target in monetary policy frame. Chapter 2 exhibits the evolvement history of the intermediate targets of the monetary policy in the west, investigating the creation background and history origin of the inflation targeting. Chapter 3 makes a comparative study of some related theories of inflation targeting, to elaborate the implement environment, basic frame and the operation theme of inflation targeting theoretically. Chapter 4 emphasizes the practice of inflation targeting system. By comparing with other intermediate targets of monetary policy, this part announces to public the characteristics and the operation condition of inflation targeting system. The last chapter is the point of the full text, emphasizing the choice of the intermediate target in China. By reviewing the history of China' monetary policy and evaluating the current intermediate target, it is clear that the applicability of the money supply is lower and lower as the intermediate target of the monetary. Given the special economic and financial background, the inflation targeting is unfeasible at present in China. Certainly, the reasons are given and the empirical methods are mainly used in this chapter. This part also consists of the conclusion and some suggestions. The conclusion is very simple: under the current economic and financial condition in China, the situation of the money supply as the intermediate target should not be continued. At the same time, it isinfeasible to turn to inflation targeting at once. Single target of interest rate is infeasible, either. Exchange rate cannot be the major intermediate target. Under this condition, the monetary policy frame should involve multiple intermediate targets, including short-term target and long-term target, which makes reference to the mode of the European National Central Bank (ECB), named "double pillar". Under this frame, money supply and inflation act as intermediate targets meanwhile, but the point and period of investigation are paid different attention.