First of all, the monetary policy is mature and prudent, which is related to China's economic environment. The main goal of monetary policy is to fight inflation, but the current price increase in China is not entirely due to inflation. Inflation is the price increase caused by excessive currency issuance, but the current price increase is more related to the rising labor cost. In this sense, it is more difficult for monetary policy to control the price increase caused by this reason, so the current situation has emerged-the policy is tighter, and prices cannot fall to the ideal level, but once the policy is relaxed, prices will rise faster. Therefore, this determines that monetary policy will remain neutral for a long time.

Second, under neutral circumstances, monetary policy must be fine-tuned and there will be no directional changes. Monetary policy is closely related to China's economy. Even if monetary policy is slightly loosened, its help to the economy and its stimulus to inflation should be balanced, so its stimulus effect is limited.

Third, the adjustment of the deposit reserve ratio is only a measure to supplement liquidity, not a change in the direction of monetary policy. In the past, China's monetary replenishment mechanism was closely related to foreign exchange holdings. Since the fourth quarter of last year, the decline in foreign exchange holdings means that the central bank's channels for replenishing money are blocked, so liquidity will be tight. The hedging method is repurchase or deposit reserve ratio in the market. This method is only related to the breadth and tightness of liquidity and has nothing to do with the direction of monetary policy.

2. Neutral monetary policy refers to the monetary policy that the monetary interest rate is completely equal to the natural interest rate. In other words, it is a monetary policy that ensures that monetary factors do not affect economic operation, thus ensuring that the market mechanism plays a fundamental role in the process of resource allocation without interference. It is precisely because of this monetary policy concept that the Federal Reserve has raised interest rates several times since June 2004. Fear of rising inflation is not the main reason, but the most important consideration is to use interest rate changes to achieve a return to market equilibrium.