According to the deployment of the Central Economic Work Conference, monetary policy will play an extremely important role in the macro-control policy practice of "double prevention" in 2008. Economic growth has turned from rapid to overheating, and prices have turned from structural rise to obvious inflation, all on the premise that the money supply is relatively loose to a certain extent. To achieve the goal of "double prevention", we must control the total money supply and manage the liquidity. Therefore, tight monetary policy will play a leading role in the practice of regulating and controlling policies to prevent overheating of economic growth and obvious inflation. In fact, in 2007, the central bank has implemented a "moderately tight" monetary policy, frequently raising the reserve ratio and interest rates, recovering liquidity and tightening monetary policy. Although these policies and measures have achieved some results, they have not achieved permanent results.
Strictly control the money supply and credit supply in the total amount.
Tight monetary policy in 2008 must strictly control the total amount and pace of money and credit, better adjust the total social demand and improve the balance of payments, guard against financial risks such as asset price bubbles, and maintain financial stability and security. The state will strictly control the money supply and credit supply, steadily raise interest rates, strictly control the credit scale of commercial banks, and use hedging tools such as central bank bills and national debt to increase hedging efforts. The CBRC will also take measures to strictly control the credit scale of banks. In this way, the control of the total money supply and the scale of bank credit provides a stable monetary environment for macroeconomic operation.
Eliminate negative interest rates, prevent the economy from overheating, and get out of the strange circle of false high return on assets.
Implementing a tight monetary policy means that interest rates still have room to rise, constantly raising real interest rates and eliminating negative interest rates. Raising interest rates has a strong effect on curbing economic overheating and also helps to curb asset bubbles. Under the condition of negative interest rate, people's savings will be more transformed into financial assets with limited investment, thus promoting asset price bubbles. The lag of nominal interest rate adjustment not only affects the effect of monetary policy to shrink liquidity through quantitative tools, but also magnifies the risk of overheating caused by excess liquidity. Ensuring the stability of real interest rate will help to eliminate economic overheating and get out of the strange circle of high return on assets.
In addition to monetary policy, we should further prevent economic overheating and inflation from the institutional roots.
It is worth noting that all macroeconomic policies, including tight monetary policy, are only policies to adjust the total supply and demand relationship and variables under a given system in a short period of time. Long-term variables such as more complex systems and structures can only be reformed in a gradual time process. The realistic goal of "double prevention" is to solve the imbalance of macroeconomic structure. Macroeconomic imbalance is not only the internal and external imbalance of the real economy, but also the imbalance between the virtual economy and the real economy. In addition to monetary policy, the government should also use a variety of policy combinations and specific measures such as fiscal policy, industrial policy, land policy, social security system and income distribution system reform to deepen economic system reform, adjust economic structure imbalance, eliminate the institutional basis of economic overheating and inflation, and further prevent rapid economic growth from turning into economic overheating and obvious inflation from the institutional root.