Abstract: Interest rate liberalization is the internal requirement of building socialist market economic system． This paper constructs a theoretical framework consistent with the credit expansion structure and the interest rate transmission mechanism． The analysis shows that the double-track interest rate system is suitable for the credit expansion structure dominated by bank loan and supplemented by direct financing，and the complete interest rate liberalization is suitable for the credit expansion structure dominated by direct financing and supplemented by bank credit． LPR reform at present stage has certain limitations，it can be seen as a“transition”in the process of the interest rate market，the reform of the LPR has not been fundamently broken the two track interest rate system． From the developing trend of our country＇s credit expansion structure，direct financing will dominate， LPR transmission mechanism will mismatch． According to the reality of the current dilemma of interest rate marketization in China，this paper puts forward some suggestions，including consummating the market benchmark interest rate，determining the main monetary policy operation target and policy rates，strengthening inter-operability market，perfecting the multi-level capital market building，enhancing scientific pricing level and modern management ability of commercial bank，reducing unnecessary administrative intervention of credit and currency size.

Keywords: credit expansion structure; LPR reform; interest rate marketization reform; monetary policy transmission