Research On The Relationship Between China’s Interest Rate Term Structure And Monetary Policy

The research on the term structure of interest rates is a subject of concern in the field of finance. Financial scholars began to combine macro perspective of economists to study the interaction between the term structure of interest rates and monetary policy and other macro variables. In the context of China’s interest rate market gradually deepening the two combined studies examine the term structure of the interest rates in monetary policy-making role and research services in the macro-control of the monetary policy.On one hand, the central bank to adjust monetary policy in the face of economic shocks (such as open market operations, the rediscount rate, etc.), the impact of short-term interest rates and lead to medium and long-term interest rates, the impact of the total demand and total revenue, and ultimately achieve the goal of the regulation of the economy. The term structure of interest rates plays a bridging role in the monetary policy transmission process. On the other hand, the implementation of monetary policy, there is a longer time external time delay, but contains important information about future inflation and future economic situation in the term structure of interest rates. The term structure of interest rates is reflected in the state of development of the financial markets and the macro-economic situation, economic information to preset reference which contains fine-tune monetary policy, improve the effectiveness and relevance. Therefore, the relationship between the two on the national conditions of China’s current specific analysis, and identify ways to improve its practical significance.This paper describes the basic theory of formation of the term structure of interest rates and monetary policy system composition, define the scope of the study; then reference to the interest rate transmission mechanism in the developed economies, the term structure of the interest rates and monetary policy analysis from the theoretical level with each other the impact of the relationship; then, the specific characteristics of the interest rate term structure and the current situation of the monetary policy system. The recent adjustment of the deposit reserve ratio and open market operations of the Shanghai Stock Exchange Treasury yield curve; empirical part, the selection of the money supply as the monetary policy variable, the structure of interest rates of different maturities measure of long-term and short-term spreads, the Shanghai Stock Exchange Treasury market the data to construct a VAR model, combined with the impulse response function and variance decomposition for specific analysis.As can be seen from the empirical results, loose monetary policy has led to the spread larger tightening of monetary policy has led to the spread smaller. By analyzing the changes of the interest rate term structure, the central bank can make a preliminary judgment on the conduct of monetary policy effect. But the reaction is not rapid spread of the impact of money supply, but not significant. This shows that the existing yield curve for monetary policy reaction; money supply as an intermediate target, can not cause changes in the term structure of interest rates; the other hand, the impact of the spread of future inflation was positive. This is consistent with the theoretical impact direction. Description of the yield curve forecast future inflation when setting monetary policy can refer to the term structure of interest rates, effective information. Policy has investigated the relationship between China’s interest rate term structure and monetary policy, the discovery of the yield curve is not perfect, the linkage between the interest rate term structure and monetary policy by the development of the bond market, the intermediate target of monetary policy to select constraints. Finally, the article combined with the specific situation in China, and to make policy recommendations to improve the monetary policy, the development of the bond market.