The Choice Of Intermediate Target Of China 's Monetary Policy

As the main measure for government macroeconomic control, monetary policy had been being the focus in academic research all over the world. The intermediate objective of monetary policies are different with the various economic environment. Even in the countries which have mature financial markets, the intermediate objective of monetary policies have also experienced the change from money supply to rate. The intermediary goal of monetary policy in our country has experienced from credit controls to the money supply and interest rate changes. In this paper, the mediation targets are divided into quantitative and price type, through these two types, we can analyze the adaptability of intermediary target, by studying the historical evolution of our country’s intermediary goal, and studying the feasibility and the limiting factor of the money supply as the monetary policy intermediary target. Apart from that, we can also discuss the rationality of the interest rates as intermediate target, coupled with the development of the current interest rate marketization and the analysis of economic fundamentals in our country. In the empirical part of the article, we use S&poor’s theory to establish mathematic model, measuring and comparing the quantitative index(M2) and price index(I). So that we can test the effect of the two indexes as intermediary goals, and conclude that the interest rate as mediation role is better than the money supply. Finally, we can put forward the conclusion including deepening the process of interest rate market, promoting the reform of SHIBOR interest rate system, and exerting the mechanism of interest rate corridor, and make sure the realization of control target.