Abstract：Under a particular social economic circumstance, there is some appropriate and feasible interval of interest rates without abstract natural interest rates. The interest rate is revelant because it may have an effect on output through supply and demand mechanism,but theoretical and positive research have revealed that the output elasticity of interest rates is rather insignificant in China. Therefore, we should keep an eye on the following two points in reshaping Chinese interest rate system. First, we should make sure that interest rates stay in the equilbrium interval in accord with other parts in economy including price movement, markets of money,capital and foreign exchange etc..Secondly,while the level of interest rates is not a suitable way to manage short term demand, we may just as well make it a medium or long term orientating tool displaying policy and institution of the Government.
