Central Bank: Control Monetary Aggregates Return To Normal &Nbsp; Manage Inflation Expectations Well.

The central bank will continue to use price and quantity tools such as interest rate, deposit reserve ratio, open market operation, and at the same time further improve monetary policy tools. In line with the requirements of the Central Committee on accelerating the establishment of a framework for macro Prudential Management of counter cyclical financial systems, we should combine the total regulation of monetary credit and liquidity management with a sound macro Prudential policy framework, make use of the dynamic adjustment of differential reserves, and play a role in conjunction with conventional monetary policy tools.

The report pointed out that monetary policy from moderate easing to sound means that the growth of money supply represented by M2 should be lower than the moderate easing period, and fell to the general level of the prudent monetary policy stage in the past.

Only when the total amount of money supply returns to normal, can the central authorities put forward the requirements for good liquidity gates.

However, the report still admits that from the monetary environment of the current and future periods, the state of ultra loose monetary policy in major economies is difficult to fundamentally change in the short term. The domestic stock of money has increased rapidly in recent years. From the economic fundamentals, the endogenous driving force supporting future economic growth is stronger, the factors that drive price increases are more, inflation expectations are rising faster, and potential price increases can not be ignored.

The report said that due to the large quantity of liquidity released by the quantitative easing monetary policy implemented by developed economies into the commodity market and the relatively fast rising emerging market economies, which brought import inflation and short-term capital inflows, China was partly under the pressure of such capital inflow.

To cope with capital inflow, China's central bank and foreign exchange bureau strengthen foreign exchange management on the one hand. On the other hand, they mainly adopt measures of total hedge, freezing the liquidity of RMB brought by foreign exchange inflow, reducing the impact of foreign exchange capital inflow on China's macro-economy, and also studying the management of capital inflow into the framework of macro Prudential Management.