Interest rate policy is an important part of China's monetary policy and one of the main means to implement it. According to the needs of monetary policy implementation, the People's Bank of China uses interest rate instruments to adjust the interest rate level and interest rate structure in a timely manner, thus affecting the supply and demand of social funds and achieving the set goals of monetary policy.
The interest rate policy has become the main means for the central bank to adjust the supply and demand of money, and then adjust the economy. When the economy is overheated and inflation rises, it will raise interest rates and tighten credit; When the economy is overheated and inflation is controlled, interest rates will be lowered appropriately.
Extended data
The interest rate instruments adopted by the People's Bank of China mainly include:
1. Adjust the benchmark interest rate of the central bank, including:
(1) The refinancing rate refers to the interest rate used by the People's Bank of China to issue refinancing loans to financial institutions;
(2) The rediscount interest rate refers to the interest rate used by financial institutions to discount bills to the People's Bank of China;
(3) The deposit reserve interest rate refers to the interest rate paid by the People's Bank of China to the statutory deposit reserve deposited by financial institutions;
(4) The interest rate of excess deposit reserve refers to the interest rate paid by the central bank for the part of the reserve deposited by financial institutions that exceeds the statutory deposit reserve level.
2. Adjust the legal deposit and loan interest rates of financial institutions.
3. Formulate the floating range of deposit and loan interest rates of financial institutions.
4. Formulate relevant policies and adjust various interest rate structures and grades.
References:
Baidu Encyclopedia _ Interest rate? China People's Bank _ Overview of interest rate instruments