Abstract: Since December 2008, the United States has continued to adopt a monetary policy pattern of near-zero interest rates accompanied with Quantitative Easing (QE). This paper studies the spillover effect of the United States sustainable low interest rates on China’s monetary policy. It respectively examines the effect from operating environment effect and implementation effect of the monetary policy. Through Impulse Response Functions (IRF) and equations decomposition, the results confirm that the U.S. long-term low levels of the federal funds rate had some effect on China’s economic environment and the implementation of monetary policy, and the effect keeps enhancing over time. Therefore, for China’s monetary policy, it’s essential to take adjustment on the basis of fully considering the domestic and overseas economic environment.
Keywords: Sustainable Low Interest Rate, Quantitative Easing, Monetary Policy
source:Finance & Trade Economics ,No4,2013