Specific to the inflation period, I think how to use monetary policy steadily should be analyzed in combination with the domestic and international situation and domestic reality, because economic globalization combined with the actual shortage of economic management makes the designation and implementation of monetary policy no longer a closed and isolated system.
So in this case, I personally think that the direction of monetary policy should be based on open market operations, followed by deposit reserve ratio and interest rate. Because changes in interest rates may affect the flow of international funds. At present, foreign deposit interest rates are relatively low. In addition to entering the virtual economy, foreign capital is likely to enter China in the form of hot money, which is not bad. The harm of doing so is that it actually increases the money supply and weakens the effect of macro-control; The second is the unnecessary loss of national income. Therefore, as a last resort, it is best not to use interest rate instruments. In fact, the deposit reserve ratio in China is already very high. Although the country dropped a little last month, it is still not low. The unprecedented mention of such a high standard shows that this tool is limited at present. Now, if we want to control the money supply, firstly, we should reduce the money issuance, especially the increase of M2; The second is to carry out key control. Strictly limit the loan increment of state-owned banks and control joint-stock banks through relevant leverage. The third is to standardize all kinds of usury and usury, and reduce the space of shadow banking. In addition, the influx of hot money can be strictly controlled. All introduced funds should be combined with the real economy to improve the quality of foreign capital utilization, thus reducing the impact of hot money.