Will Chinese deposits cut interest rates? The central bank's latest response: "ballast stone" to be retained for a long time
China News Agency, Beijing, April 10 (Reporter Wei Xi) The People's Bank of China released financial statistics for the first quarter of 2020 on the 10th. At the press conference on the day, Sun Guofeng, director of the central bank's monetary policy department, responded to the issue of the benchmark interest rate of deposits that is of great concern to the outside world.
Data map: People's Bank of China. China News Service issued Yang Ming still photo source: CNSPHOTO
Sun Guofeng said that the benchmark deposit interest rate is the "ballast stone" of China's interest rate system. It plays an important role in maintaining the normal order of the deposit market and preventing irrational competition, so it must be retained for a long time.
"The benchmark deposit rate has not been adjusted since October 2015, but it does not mean that the deposit rate actually implemented by the bank has not changed."
Sun Guofeng said that in fact, the upper and lower limits of China's deposit interest rate have been liberalized, and banks can float independently. From the perspective of the bank's actual listing interest rate, the deposit interest rates of various maturities have not "floated to the top." Especially for large state-owned commercial banks, the fixed deposit interest rate is mostly about 1.3 times the benchmark deposit rate, while the current deposit interest rate is lower than the benchmark interest rate.
"We recently observed that the actual implementation rate of some bank deposits has fallen, reflecting the market mechanism is working. We still have to believe the market."
Sun Guofeng emphasized that with the central bank orderly guiding the overall interest rate of the market to fall, the interest rates of various market-oriented deposit products of various types have been significantly reduced.
At present, the yields of some representative money market funds, such as Yu'ebao and WeChat Wealth Management, have fallen to less than 2%, which is lower than the bank's one-year deposit interest rate. .
Sun Guofeng said that with the deepening of the reform of the loan market quoted interest rate LPR, the marketization level of the loan market interest rate has improved significantly and has been in line with the market. The decline in loan interest rates also helps stabilize deposit interest rates. "The central bank's ability to provide liquidity is unquestionable. The efficiency of China's monetary policy transmission has recently been significantly improved."
China has repeatedly lowered the deposit reserve ratio in recent years, but has not cut interest rates for many years. China has made 10 RRR cuts since 2018, and the average deposit reserve ratio has dropped from 14.9% at the beginning of 2018 to the current 9.4%. (Finish)