An International Comparison Of Monetary Policy Performance

In recent years, China’s economy has been operating in various conflicts including excess liquidity, asset price inflation, increased foreign trade friction,increased pressure on the RMB appreciation. Since 2015, the people’s Bank of China repeatedly lowered the benchmark one-year lending rate and the benchmark one-year deposit rate, but still failed to reduce the downward pressure of the economic. With the development of the economic, monetary policy is increasing becoming an important instrument in macroeconomic adjustment and control. Facing of the increasingly complex economic situation, it not only has theoretical significance but also has important practical significance on how to implement effective monetary policy. At present, there are three kinds of common monetary policy on international operation strategy:(i) one is inflation targeting, which was rising in 1990 s and represented by New Zealand.(ii) One is the monetary policy strategy that interest rates is used as a monetary policy intermediary target.(iii) One is the monetary policy strategy that money supply is used as a monetary policy intermediary target.This paper open the study by a new perspective. First, the different countries studied are divided into three different categories by their monetary policy strategy,then study the monetary policy practices of 29 countries by using comparative analysis and empirical analysis and other research methods, and draw the following conclusions:(i) Inflation targeting countries achieve a lower and more stable inflation rate.Inflation targeting not only stabilize prices in mature industrialized countries,but also made remarkable achievements in developing countries in emerging markets.(ii) Inflation targeting can indeed have an impact on economic growth. Granger causality test have shown that there are mutual Granger cause between inflation and GDP whether in mature industrialized countries or developing countries.(iii) Money supply as the intermediate target of monetary policy at this stage is still valid, but with the development of the economic and the ever-changing financial markets, the effect of such policies is more and more weakening. This shows that it ismore and more difficult to promote economic growth by adjusting the money supply.Therefore, money supply may no longer be appropriate as the intermediate target of monetary policy in the future.(IV) The performance of monetary policy in the United States and Japan is significant. The empirical analysis in the fifth chapter shows that the federal funds rate of the United States and overnight interest rates of Japan have a significant effect on their inflation rates and GDP.(V) A comprehensive and diversified monetary policy is a reasonable choice for our country. At this stage, not only the central bank lack of the sufficient independence and transparency, but also the low market-oriented interest rate is not very high, the interest rate transmission mechanism is not very smooth, the financial market infrastructure is not perfect. Therefore, Single interest rate policy or inflation targeting do not fit our national conditions at the present stage.In short, with the degree of marketization of our country becoming deeper and deeper, the role of money supply as the intermediate target of monetary policy in China will be weaker and weaker. As we are accelerating the pace of market-oriented interest rate reform and improving the financial market infrastructure, the development direction of China’s monetary policy can be: to the inflation target system based, supplemented by interest rate policy.