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1、LOGOMONEYTARY POLICY Presented by郑向溢邓雅仪蒲佳樱周滢娜陈何亮朱宝OutlineBack ground knowledge1Chinese monetary policy of recent years2An insight into the “tight monetary policy ” 3Monetary policy ,price and comments4Background knowledgeWhat is monetary policy?Monetary policy is the process by which the government,
2、 central bank, or monetary authority of a country controls (i) the supply of money, (ii) availability of money, and (iii)cost of money or rate of interest, in order to attain a set of objectives oriented towards the growth and stability of the economy.DiagramToolsThe required reserve ratioOpen marke
3、t operationsDiscount rateOpen market operationsBanks decrease loans And destroy moneypublicMONEYMONEYThe central bank buys government securities and banks gain reservesBanks increase loans And create moneypublicMONEYMONEYThe central bank sells government securities and banks lose reservesDiscount ra
4、te If the central bank wants to expand the money supply, it reduces the discount rateIf the objective is to contract the money supply, the central bank raises the discount rate.The required reserve ratioIf the central bank wishes to increase the money supply, it decreases the required reserve ratio.
5、 Vice versa.How monetary policy affects the interest rateIncrease in the money supply Money surplus and people buy bondsDecrease in the interest rateDecrease in the money supply Money shortage and people sell bondsIncrease in the interest rateThe keynesian 凯恩斯 monetary policy transmission mechanismC
6、hange in the monetary policyChange in the money supplyChange in interest ratesChange in prices, real GDP, and employmentChange in the aggregate demand curveChange in investmentChinese monetary policy of recent years1,The deepening of the fallout from the US sub-prime mortgage crisis 2,the slowing do
7、wn of the global economic growth3,higher international crude oil prices making the inflationary pressures increased significantly 4 the over heating of domestic economy 5 specific monetary policies Chinese monetary policy of recent yearsuadopting open market operations u raising interest rates, bank
8、 reserve ratios uguiding banks u improving the exchange rate regime “in a pro-active,manageable and gradual manner“ uprevent rapid economic growth from overheating, and structural price rises from becoming entrenched inflationAn insight into the “tight monetary policy ”Retrospection of recent-year p
9、olicies since 1997: implementing a prudent monetary policy From 1998 to 2002: increasing money supply to counter deflationary pressure From 2003 to 2007, tightening the monetary policy An insight into the “tight monetary policy ”Why “prudent” to “tight”Consumer inflation hit an 11-year high of 7.1 p
10、ercentconsumer price index (CPI) increased by 8.7 percenta resurgence in fixed asset investment, excessive credit supply and liquidityAn insight into the “tight monetary policy ”Predictive effects curb overheating in asset marketscap structural price rises-Gao HonghuiMonetary policy and priceHowever
11、, does it mean that all the price of goods are going up?TEXTThe answer is NOMonetary policy and pricePrice of goodsIndustrial products products of the resourceproducts with high technical advantageResidents consumer goods food and some monopoly productsA CPI- Consumer Price Index (消费 者物价指数 )is an in
12、dex number measuring the average price of consumer goods and services purchased by households. The percent change in the CPI is a measure of inflation. Monetary policy and priceCPIMonetary policy and priceA PPI -Producer Price Index (生产者物 价指数 /工业品出厂价格指数 )measures average changes in prices received b
13、y domesticproducers for their output.PPIMonetary policy and priceThe CPI and PPI trend Since 2007Monetary policy and priceChinas CPI between 1990 and 20071990年 3.1 % 1991年 3.4 % 1992年 6.4 % 1993年 14.7 % 1994年 24.1 % 1995年 17.1 % 1996年 8.3 % 1997年 2.8 % 1998年 -0.8 % 1999年 -1.4 % 2000年 0.4 % 2001年 0.7
14、 % 2002年 -0.8 % 2003年 1.2 % 2004年 3.9 % 2005年 1.8 % 2006年 1.5 % 2007年 4.8%Monetary policy and priceThe Inflation rate and the interest rate uCurb inflation expectation in 2008uAdjust the annual interest rate Monetary policy and priceThrough market-oriented meansuBanks deposit reserve requirement rat
15、iouOpen market operations uCentral bank billsMonetary policy and priceGovernment- top priority is taming inflation1.keep implementing a tight monetary policy.2.boost food production.3.protect farmers and curbs imposed on grain exports to increase supplies in domestic markets.4.raise interest rates.5.solve hosing and education problems and keep the society harmonious.6.adjust fiscal policies.EXPLANATIONhttp:/ htmlLOGO
