The Influence Of Interest Rate On Inflation Under The Background Of Interest Rate Marketization

Interest rate,meaning the price of money,is one of the most important price signals in the financial market,which has a major impact on many factors in the economy.As one of the macroeconomic goals,price stability is closely related to interest rates.One of the means frequently used by the country to manage inflation is to regulate interest rates.In an effort to reveal the impact of market interest rates on inflation in the context of interest rate marketization,it conducts theoretical and empirical analysis in this paper.Studies have shown that during the process of interest rate liberalization,changes in interest rates can cause significant changes in the inflation rate,hence inflation can be managed by guiding interest rates.The reason is that the root cause of inflation is the existence of a positive output gap in the economy.With the advancement of interest rate liberalization,the monetary policy transmission path of interest rates is gradually clear,and changes in interest rates can be reflected in the product market and the currency market,making the actual output re turns to the level of potential output,and the return of actual output to potential output reduces the rate of inflation.In the meantime,to analyze whether interest rate liberalization is an indispensable factor in the adjustment of interest rates to inflation,it empirically investigates the impact of interest rates on inflation in the context of non-interest-rate marketization in this paper.The empirical results show that under the background of non-interest-rate marketization,the impact of C hina's interest rate on inflation is insignificant,whose reason is that under the background of non-interest-rate marketization,the interest rate is the official rate,and it does not have the characteristics of marketization,at the same time,the adjustment of interest rates is lagging,therefore,the impact of interest rates on inflation is not significant.Finally,we came to the conclusion that with the implementation of interest rate marketization,the interest rate transmission mechanism of China's monetary policy has gradually become open,interest rates can be used as intermediate targets of monetary policy to manage inflation.In order to better perform this function,we should deepen the reform of interest rate marketization,actively cultivate benchmark interest rates,and strengthen financial supervision.