Abstract: In the market environment of financial friction, this article builds a new Keynesian DSGE model to analyze the effect of unconventional monetary policies on the term structure of bond interest rate by expanding Taylor rule analysis of large-scale bond purchase, observe the effects of various exogenous shocks on long-term and short-term interest rates, savings consumption, output and inflation,and compare the welfare losses of different policy combinations. Research finds bond purchases are transmitted to total output and prices through the “term preference” channel; the optimal monetary policy combined with conventional and unconventional monetary policies will significantly reduce welfare losses compared with the use of conventional monetary policies alone; even if not during the financial crisis, the unconventional monetary policy of the central bank will be beneficial to stabilizing total output and inflation, especially near zero interest rates. The inflation adjustment of conventional monetary policy is a useful complement to the response of unconventional monetary policy to the total output gap, and the coordination can reduce welfare losses.

Key words: unconventional monetary policy, market segmentation theory, financial friction