Monetary Policy Interest Rate Rules in China-The Analysis based on FCI

For overlooked the structural changes in representative financial variables and unexpected externanl shocks,when building the FCI and inspection the interest rate rules selection of central bank,and whether monetary policy is positive or not. ForFor the first time,FCI werewerebuilted by the HTVPVAR model with time-varying variance decomposition and impulse response,and it was brought into the STR model in the form of Taylor's interest rate rules. Inspection results argued that monetary policy would make nonlinear adjustment for the gap of inflation gap changes,and the current financial market in good(bad) will strengthen (weaken) the monetary policy response to the changes in the gap of inflation. This conclusion can be used as the empirical evidence for selecting the interest rate as the intermediate target of monetary policy.