Both of them are the main means for the central government to regulate the economy, and the functions and purposes of upward adjustment and downward adjustment are the same. They are parallel and can be used separately or in combination.

There are some differences between the two:

Deposit reserve, absorbing or releasing bank funds. It is the central bank's liquidity control measures for commercial banks.

Deposit and loan interest rates absorb or release social funds. It is the control of social mobility by commercial banks.

Theoretically, raising the reserve ratio will reduce the amount of funds of commercial banks and the loanable funds of commercial banks, thus increasing the deposit and loan interest rates.

Extended data:

We know that the main business of commercial banks is deposits and loans. Only when there is a deposit can there be a loan. Commercial banks now deposit 1 trillion, and now the funds are tight, and the loan demand is 2 trillion. Obviously, it is impossible for commercial banks to lend 1 trillion. If all loans are made, depositors will have no money to withdraw money, so commercial banks will leave a certain proportion of deposits for depositors to take away and settle their funds.

Therefore, it is reasonable to simply understand reducing the deposit reserve ratio as "releasing water", but it is not entirely correct. Because the purpose of each reduction is different, the flow of funds will be different. The reduction of the deposit reserve ratio will release about 700 billion yuan of liquidity, and the M2 date will increase by 3 to 4 trillion yuan.

Reducing the deposit reserve ratio shows that the market funds are tight. In the context of the continuous interest rate increase by the Federal Reserve, the decrease of foreign exchange reserves, the RMB falling below the 6.5 mark against the US dollar and the A-share falling below the 3,000 mark, the reduction of the deposit reserve ratio will undoubtedly play a positive role, but supervision should also be strengthened to prevent funds from flowing into the property market and let them flow to places where they are really needed.

Generally speaking, reducing the deposit reserve ratio is to hedge the positive actions of the Federal Reserve in raising interest rates and RMB depreciation. Moreover, the reduction of the deposit reserve ratio shows that there is not enough money in the market. How can lack of money cause a new round of inflation and a sharp rise in house prices?

References:

Baidu encyclopedia-deposit reserve ratio