The Correlation Between China’s Monetary Policy And Interest Rate Term Structure Of National Debt

In a mature market,Treasury bill rate position is very important.It is not only as a reference for the development of the benchmark interest rate, but can help investors in risk management. The term structure made in an efficient bond market is useful to provide forward-looking information. This can help provide the reference basis to authorities about the economic development policy. It can also become the central bank monetary policy formulation and adjustment of a secondary index. As China continues to promote the interest rate market and the bond market continues to improving. Correlation between China’s monetary policy and the Treasury term structure of interest rates is of great significance.This paper reviews the theory of the term structure and monetary policy. From the theoretical level,Tthe impact of monetary policy on the term structure of interest rates on government bonds are analyzed.In order for the content to be studied have a preliminary knowledge and understanding. In empirical terms, First, Using the charts and descriptive statistics of interest rates to study some of the characteristics of a simple analysis of the spot rate bonds. Since then the regression model used to investigate the effect of monetary policy on interest rates of bonds of different maturities by using cointegration and vector and the horizontal factor term structure of the impact factor of the slope and curvature factors. Finally, analysis of the term structure of government bonds can be reflected in the monetary policy stance and macroeconomic information provided.Findings show:Spot rate volatility of short-term debt is greater than the volatility of the spot rate of long-term bonds. This shows that the macroeconomic impact of short-term debt interest rates by a relatively large. Other, Rise in the overall level of debt will tighten monetary policy interest rate curve. Interest rate yield curve will become smaller. The expansionary monetary policy will lead to the opposite conclusion. By changing the structure of the Treasury yield curve, Government policy can extract information about the effects of monetary policy implementation. Thus fine-tune monetary policy in order to achieve the desired effect. Impulse response graph also shows the level and duration factor Treasury yield curve spreads on money supply shock response is not significant. This shows that is not sensitive to reflect the current term structure of China’s monetary policy implementation. That the implementation of monetary policy in the money supply as an intermediate target can cause changes in a timely and effective Treasury term structure of interest rates. As a result, the effect is the impact of the implementation of monetary policy. Other, Level factor term structure of two months ahead of the development trend of CPI. This shows the level of factor in economic development is reflected in a useful predictor. Although in recent years, China’s rapid economic development, The bond market is constantly moving towards a mature market.But affected by many factors. The term structure of China’s lack of scientific rationality. In order to better promote the formation of a scientific and rational Interest Rate Term Structure. Tips to better play the role of information in the term structure of monetary policy adjustment. Finally, policy recommendations put forward two articles from the term structure optimization and monetary policy.