Study On The Interaction Between The Uncertainty Of China's Monetary Policy And Inflation Expectation

A stable monetary policy can promote the sustainable and stable development of a country's economy.China's current economic environment is generally tightening,and structural,institutional,and cyclical issues are intertwined.Monetary policy is still in a state of mixed use of quantitative and price currency instruments.In the complex and changing economic situation and the heavy task of monetary policy control,the central bank has many uncertainties regarding the control and implementation of monetary policy.Since 2019,the Central Bank has repeatedly stated in its "Monetary Policy Implementation Report" that it should be "vigilant against the spread of inflation expectations",indicating the importance the country attaches to the management of inflation expectations.Higher monetary policy uncertainty will lead to bias in public inflation expectations,which in turn will affect the effectiveness of monetary policy implementation,further increasing the uncertainty of monetary policy.Therefore,this article attempts to construct an index that can quantify the degree of uncertainty of China's monetary policy,and on this basis,studies the relationship between the uncertainty of monetary policy and the pre-inflation period to scientifically formulate and implement monetary policy and better guidance for the central bank.Public inflation expectations provide some research.This article first makes a theoretical analysis of the uncertainties in the formulation and implementation of China's monetary policy,and on this basis explains its interaction with inflation expectations.Then,the CMPU index is constructed by a multivariate comprehensive indicator construction method,and is fitted to the actual control of China's monetary policy in recent years.The index shows that the three periods from the end of 2008 to the first half of 2009,2013-2015,and the second half of 2018 to the first half of2019 showed a higher situation,corresponding to the deterioration of the domestic economy before and after the subprime crisis,and the loose monetary policy of the central bank saved the market Period;the key period when the monetary policy system changes from quantitative to price;and the period when monetary policy is frequently regulated due to the impact of Sino-US trade friction and the downturn of the world economic environment.Overall,the CMPU index can better reflect the uncertainty of the real monetary policy.Then use the SVAR model to perform impulse response and variance decomposition on the impact of the two.The empirical results show that there is a mutual predictive ability between the uncertainty of monetary policy and inflation expectations.Inflation expectations will have a positive impact on the uncertainty of price-based monetary policy,while the direction of quantitative monetary policy will be affected in the opposite direction.From the perspective of the magnitude of the impact,changes in public inflation expectations will have a greater impact on price-based monetary policy Obviously,the duration is relatively longer.In addition,the research also found that the impact ofprice-based monetary policy uncertainty has little effect on inflation expectations,which reflects that China's market benchmark interest rate system is not yet perfect,and the public is expected to be comprehensively affected by various interest rates.It needs to continue to advance.Based on the research results,this article makes the following suggestions: First,Strengthen the advance management of inflation expectations during the formulation and implementation of monetary policy.The policy authority can conduct a staged test of the implementation effect of monetary policy in the middle period of monetary policy transmission to determine whether the implementation effect has deviated.Second,Speed up the pace of interest rate consolidation and clarify the "loan interest rate anchor".Since the LPR and policy interest rates maintain a relatively stable interest rate gap,it can be used as an anchor interest rate.Third,the public itself should increase its focus on monetary policy and improve financial literacy.When releasing relevant policy information,the central bank should try to avoid words that are too academic to facilitate the transmission of policy intentions to the public.Fourth,the central bank should pay attention to ex-ante communication and ex-post interpretation of monetary policy operations to maximize the effectiveness of communication.We can learn from the methods of public discussion and voting results of the United States to broaden the scope of monetary policy information.