The low price level indicates that the market consumption demand is insufficient and the economy is in a state of recession. In order to stimulate demand, the government will implement a loose monetary policy and lower interest rates, so that people will not deposit so much money in the bank. Its purpose is to stimulate consumption.

There is a short-term relationship between bank interest rate and price level. The interest rate reflects the country's economic situation. If the national interest rate is high, it shows that the national economy is in good condition, which will lead to an increase in the amount of money held by individuals, which will lead to an increase in the price level.

If the decline in international interest rates indicates that the national economic situation is in a downturn, it will indirectly affect the reduction of individual capital's holdings and naturally affect the decline of the price level. So there will be a very common situation, that is, if the national interest rate is high, the price will be high, and if the national interest rate is low, the price will be low. In this way, we can directly see the current situation of the national economy from the ordinary price level.

Marketization of interest rate-let the market play a decisive role in resource allocation.

The marketization of interest rate means that the market plays a decisive role in the allocation of funds. 20 13 The Third Plenary Session of the 18th CPC Central Committee adopted the Decision on Several Major Issues of Comprehensively Deepening Reform, which clearly stated that "the key to deepening economic system reform is to make the market play a decisive role in the allocation of resources", while interest rate is the price of funds, and interest rate marketization reform is a reform that makes the market play a decisive role in the allocation of funds.

At present, the mainstream economic theory mainly describes the decision of interest rate from the perspective of simultaneous equilibrium of product market and money market. In the product market, residents' tendency of "capital constraint" and their time preference for current consumption determine the savings function, and enterprises' expectation of investment return determines the investment function. Savings and investment * * * form an interest rate-output equilibrium in the product market.

In the money market, the liquidity preference formed by residents through trading, prevention and speculation determines the money demand, while the central bank determines the money supply. Money demand and money supply together constitute the interest rate-output equilibrium of money market. Therefore, the two markets determine interest rates at the same time, which is a theoretical interest rate marketization decision.