The lowered boots finally fell, earlier than everyone expected. This afternoon, the People's Bank of China announced that it had decided to cut the deposit reserve ratio of financial institutions by 1 percentage point, of which, on January 15, 2019 and January 25, respectively, it was lowered by 0.5 percentage points. At the same time, the Medium Term Lending Facility (MLF), which expires in the first quarter of 2019, is not renewed. The central bank said that this move is intended to further support the development of the real economy, optimize the liquidity structure, and reduce financing costs. This arrangement can basically hedge the liquidity fluctuations caused by cash placement before the Spring Festival this year, which is conducive to financial institutions to continue to increase support for small and micro enterprises and private enterprises.
The RRR cut will release about 1.5 trillion yuan of funds.
The relevant person in charge of the central bank said that the RRR cut will release about 1.5 trillion yuan of funds, plus the upcoming release of the medium-term loan facilitation operation and the funds released by the inclusive financial assessment of the inclusive finance, and then consider the first quarter of this year. After the medium-term loan facility is no longer sustainable, the net long-term capital is about 800 billion yuan.
The RRR reduction is not a flooding
Does the RRR cut mean a change in the direction of sound monetary policy? The person in charge still gave a negative answer. “The RRR cut is still a directional regulation, not a flood of water, and the stable monetary policy orientation has not changed.” The relevant person in charge of the central bank said that the RRR cut policy was implemented twice, in line with the rhythm of cash before the Spring Festival, which is conducive to The total liquidity of the banking system remained reasonably abundant, and it also took into account the internal and external equilibrium, which helped to maintain the basic stability of the RMB exchange rate at a reasonable and balanced level.
According to reports, the net reduction of RMB 800 billion in long-term incremental funds for the RRR cut and related operations can effectively increase the source of funds for real economy loans such as small and micro enterprises and private enterprises. The replacement of medium-term loan facilities can also directly reduce the interest rate of relevant banks by about 20 billion yuan per year, which is beneficial to the real economy to reduce costs through bank transmission. These are all conducive to supporting the development of the real economy.
The relevant person in charge of the central bank pointed out that the current Chinese economy continues to develop healthily and the economy is operating in a reasonable range. The People's Bank of China will continue to implement a prudent monetary policy, maintain a moderate level of tension, not engage in flooding, reorient and control, maintain a reasonable and sufficient liquidity, maintain a reasonable growth in the scale of money and credit and social financing, stabilize macro leverage, and balance internal and external balances. High-quality development and supply-side structural reforms create an appropriate monetary and financial environment.
The RRR has long been a precursor. The market is expected to heat up.
It is worth noting that there have been many precursors to the central bank's RRR cut. It can be said that the market's expectation of a RRR cut in January has been heating up. At the State Council executive meeting held on the 24th of last month, it proposed “improving the policy of targeted reduction of inclusive finance. Expanding the policy of sub-loan refinancing to eligible small and medium-sized banks and new Internet banks.” It is usually deployed at the State Council executive meeting. After that, the central bank will act. For example, on June 20, 2018, the State Council executive meeting deployed “to further ease the financing difficulties of small and micro enterprises, and continued to promote the real economy to reduce costs”. Subsequently, on June 24, the central bank announced a targeted RRR cut.
In addition, the central bank announced on the first working day of the new year that since 2019, the inward financial standard for small and micro enterprise loans will be adjusted from “single household credit less than 5 million yuan” to “single household credit less than 10 million yuan”. yuan”. This means that not only institutions that did not meet the scope of targeted RRR reduction are expected to make up for the “reduction of RRR” benefits, but the coverage of targeted RRR reductions will be further expanded, which will obviously guide financial institutions to better meet the loan needs of small and micro enterprises. More small micro companies benefit.
The central bank’s RRR cut is earlier than market expectations.
Market participants generally expect that the central bank should be down after New Year's Day and before the Spring Festival, most likely from mid-January to early February.
For example, CITIC's fixed-income analyst clearly believes that the probability of RRR RRR before the Spring Festival in 2019 is large. In January 2019, the natural maturity of funds was relatively high, and the liquidity of the banking system faced a situation similar to that of 2018. This RRR cut is likely to be launched after New Year's Day and will be implemented before and after the expiration of the deposit receipt and tax payment factors.
Shen Xinfeng, chief macro analyst of Northeast Securities, believes that the market is expected to once again ushered in the central bank's RRR cut in January. On the one hand, the economy still has downward pressure and needs monetary policy care; on the other hand, the pre-holiday residents withdraw cash, pay taxes and other factors together, 2019 Before the Spring Festival, the period of liquidity is tight, and the time is also suitable for the introduction of corresponding policies. However, the future monetary policy will still not flood the flood, and will focus on supporting the financing of private enterprises and small and micro enterprises, and pay attention to the dredge of the transmission channels of monetary policy.
Zhang Yu, head of macroeconomic research at Huachuang Securities, commented that “the central bank adjusted the assessment criteria for small-scale enterprise loans for inclusive financial adjustments”, the initiative actually expanded the scope of small and micro enterprises and expanded the policy coverage of inclusive finance. The policy further tilts the embodiment of small and micro enterprises, and it is expected to be in mid-January or downgrade, while credit channels continue to be unblocked.
The Guotai Junan Macro Research Report accurately predicted that the central bank will fully reduce its benchmark by 100 basis points in January. According to the report, at the end of December, the Standing Committee of the National People's Congress deliberated and issued some new local government debt limits in advance. Under the pressure of local debt resolution and repayment, the infrastructure rebound will be helped. The increase in the supply of government bonds has had an impact on market liquidity. It is expected that the central bank will hedge 100 points in January.
The market expects the central bank to continue to lower the RRR this year.
Professionals also believe that the central bank should not only be reduced once this year.
Peking University Guanghua School of Management released the report “China Economic Outlook 2019” on January 3, predicting that the benchmark interest rate will not be lowered in 2019, and the money supply will not increase significantly, but the central bank is expected to reduce the overall rate by about 2 percentage points. Flexible use of various structurally oriented monetary policy tools for precise adjustment of liquidity.
The report predicts that in 2019, the central bank will pay more attention to strengthening the transmission mechanism of monetary policy and solving the problem of structural liquidity shortage. In order to solve the structural problems of the abundance of liquidity in the inter-bank market and the difficulty in financing private and small-scale enterprises, the central bank's monetary policy has already shown obvious structural characteristics, including the frequent use of targeted RRR and the recently introduced structural interest rate cuts. The nature of the directional medium lending facility (TMLF). In addition, the central bank also accurately supports private enterprises through other more specific policy tools, including support for private enterprise bond financing, equity financing, private equity support funds, improving the weight of credit evaluation services and setting the “one two five” target. This trend will continue and be strengthened in 2019. The central bank will mainly focus on improving the monetary policy transmission mechanism, so as to achieve the goal of facilitating the support of the real economy through the channel of funds, so the flood irrigation will not reappear.
However, Lian Ping, chief economist of Bank of Communications, predicts that the extent and frequency of central bank RRR cuts in 2019 may be less than 2018. The possibility of lowering the benchmark interest rate for deposits and loans is small, one lacks space and the other may increase unnecessary disturbances. According to statistics from CITIC Securities, in 2018, the central bank lowered the RRR four times, each time reducing the deposit reserve ratio by 0.5-1 percentage points, and releasing funds of about 2.3 trillion yuan.
Lian Ping believes that when liquidity is already abundant, the monetary policy is largely relaxed, and more attention should be paid to how to promote sufficient funds to flow into the real economy. In order to reduce the cost of domestic financing, many measures can replace interest rate cuts, such as targeted RRR cuts, increased low-cost credit supply, and lower market interest rates. In the future, under the framework of a prudent monetary policy, the central bank may further enhance the transmission efficiency of the combined policy instruments for the market. At the same time, the regulatory flexibility will be further enhanced to match the policy orientation of targeted support.
Text / Beijing Youth Daily reporter Cheng Wei
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