A Study On Interest Rate Control Mechanism In The Process Of Interest Rate Marketization

Interest rate marketization and interest rate control have attracted much attention in recent years which have been global topics. The revolution of interest rate marketization has not been accomplished in china and regulated interest rate and market interest rate coexist which reduces the control effects of interest rate. Most of recent literature concentrates on interest rate marketization, a little definitely put forward the idea of establishing interest rate control mechanism in the process of interest rate marketization, and very little studies the framework of interest rate control mechanism.With interest rate control as the main line, by reviewing the corresponding literature and expounding the rationale and the evolution of interest rate policy in china, this paper lays the foundation of empirical analysis on interest rate control effects. Using two sets of monthly financial data respectively to analyse the control effects of regulated interest rate and market interest rate by cointegration test and impulse response and variance decomposition, the results indicate that:regulated interest rate and market interest rate work on the consumption, investment,output and price in the same direction but vary in size and both of the two kinds of interest rate have a minimum influence on the output; there isnot a long-term,stable relationship between regulated interest rate and four economic variables while there is a long-term,stable relationship between market interest rate and investment; regulated interest rate has a stronger influence on the consumption and price than market interest rate but it is not sustainable, on the contrary, market interest rate has a sustainable and strong influence on the investment; although the comprehensive control effect of market interest rate is better than regulated interest rate’s, the total effect is still weak; and a lack of interest rate control mechanism is an important reason. Then this paper points out the importance of establishing interest rate control mechanism ulteriorly, and expounds the mechanism from five aspects:the choosing of money market benchmark interest rate, the application of interest rate corridor model, the perfection of the interest rate transmission mechanism, interest rate evaluation system and the important role of PBC.