The MLF interest rate remained unchanged at 2.95% in May-
What signal does the "rate cut" fail?
Economic Daily · Reporter Yao Jin of China Economic Net
□ After the continuous “rate cut” and RRR cuts since February, the money market interest rate center has moved down significantly, the current market liquidity is already at a relatively high level, and the central bank has also recently suspended continuous reverse repurchase operations.
□ The key to this round of policy stimulus should be fiscal policy, because fiscal policy benefits a wider range, can directly benefit small and medium-sized enterprises and households, is more targeted, and monetary policy plays a complementary and cooperative role.
Following the People ’s Bank of China ’s failure to renew the due medium-term loan facility (MLF) on May 14, the central bank routinely launched a new monthly MLF on the 15th and kept the interest rate unchanged at 2.95%. The relevant operations exceeded market expectations .
The current loan market quoted interest rate (LPR) is formed based on the open market operating interest rate plus points. The open market operating interest rate mainly refers to the policy interest rate of MLF. The reduction of MLF interest rate will drive the loan market interest rate downward.
The Politburo meeting held not long ago pointed out that a sound monetary policy should be more flexible and appropriate, using means such as RRR cuts, interest rate cuts, and re-loans to maintain reasonable and sufficient liquidity, guide the loan market interest rate to fall, and use funds to support the real economy. It is on small, medium and micro enterprises. This triggered greater expectations of the market for "rate cuts."
Why does the MLF interest rate remain unchanged? Wang Qing, chief macro analyst of Dongfang Jincheng, believes that, firstly, after the continuous "rate cut" and RRR cut since February, the money market interest rate center has significantly moved down, the current market liquidity has been at a relatively high level, and the central bank has also recently continued Suspend reverse repurchase operations. This means that the regulatory authorities have considered that the current total liquidity of the banking system is at a reasonable and sufficient level, and the need to further guide the downward interest rate of funds in the short term is low.
The data shows that on May 15, the Shanghai Interbank Offered Rate (Shibor) overnight varieties reported 0.8640%, the 7-day period reported 1.6570%, the 14-day period reported 1.2590%, and the 1-month period reported 1.30%. Although it has risen from the 13th low, it is still at a historical low.
Secondly, the first quarter banker questionnaire survey released by the Central Bank showed that the loan approval index in the first quarter rose by 14.1 percentage points from the previous month to 64.7%, which was significantly higher than the previous high level (57.2%) in the second quarter of 2009. This means that the current credit environment has improved significantly. However, the loan demand index in the first quarter rose only 0.7 percentage points from the previous month to 66.0%, 17.7 percentage points lower than the second quarter of 2009. Among them, the loan demand index of small enterprises was not only far lower than the historical high, but also decreased by 1 quarter from the previous quarter percentage point.
"This shows that, mainly due to weak macroeconomic total demand and shrinking corporate orders, the demand for loans in the real economy has not risen synchronously with the improvement of the credit environment. Therefore, the focus of current macroeconomic policies may be through strong Fiscal and industrial policies drive consumption and investment, and drive the demand for corporate loans to rise significantly, thereby giving full play to the potential of existing monetary policies in boosting short-term economic growth momentum. "Wang Qing said.
Will interest rates be lowered this month? Wang Qing believes that considering that the LPR quotes are based on the MLF interest rate, there is a high probability that the LPR quotes will remain unchanged for one year and more than 5 years on May 20. However, it cannot completely rule out the possibility that the central bank will guide commercial banks to make modest concessions to the real economy, mainly aiming at a slight reduction in the 1-year LPR quotes for corporate loans.
"The probability of short-term central bank interest rate cuts is low, mainly due to ample liquidity in the domestic market and loose credit environment. Economic activities are gradually picking up. Short-term interest rate cuts are not urgent, especially to avoid interference with the expectations of the housing market and exchange rate stability." Ministry analyst Zhou Maohua said, but the counter-cyclical adjustment is still expected to be further strengthened, the prudent monetary policy is more flexible and appropriate, with active fiscal policy, supporting the economy.
Zhu Haibin, chief economist at JP Morgan Chase China, expects that there will be another round of "rate cuts" before the end of June. Reverse repurchases, MLF, LPR, and even the benchmark deposit rate may further decline. However, the key to this round of policy stimulus should be fiscal policy, because fiscal policy benefits a wider range, can directly benefit small and medium-sized enterprises and households, is more targeted, and monetary policy plays a more complementary and cooperative role.
Wang Qing judged that in the future, he will focus on stabilizing the overall employment situation and boosting economic growth momentum. After June, the central bank's "rate cut" rhythm may be moderately accelerated, and there is still room for downward MLF interest rates during the year. This will drive the general loan interest rate, which is currently at a low level, to drop again, which in turn will stimulate corporate loan demand and reduce the financing cost of the real economy. Under the principle of "no housing, no speculation", the downward rate of mortgage interest rates will be relatively small.