China-Singapore Jingwei client, May 15th, on the morning of the 15th, the central bank announced that it will carry out a medium-term lending facility (MLF) operation of 100 billion yuan for a period of one year, and the winning bid rate remains unchanged at 2.95%. No reverse repurchase operation will be carried out today.
Source: Central Bank website
The central bank also stated that from April 15 onwards, it will reduce the deposit reserve ratio by 1 percentage point for rural financial institutions and urban commercial banks operating only in provincial-level administrative regions. . Today, the second deposit reserve ratio adjustment for the implementation of the policy released about 200 billion yuan of long-term funds.
In the last transaction (May 14), 200 billion yuan of MLF expired, but the central bank did not launch a sequel, exceeding expectations, and the open market net recapture of 200 billion yuan. At that time, industry analysts pointed out that this does not mean that there will be no more MLF operations within the month, nor does it mean a change in monetary policy.
Jianghai Securities analysis said that MLF's expiration is not renewed, the fundamental reason is sufficient liquidity. From the perspective of fund interest rates, the overnight fund interest rate has remained below 1% since this week, indicating that after the previous RRR cut and the re-loan funds were released, the overall liquidity of the banking system was excessive. When the overall liquidity is very sufficient, MLF really does not need to operate.
The announcement issued by the central bank on that day also confirmed this. The central bank said in the announcement on the 14th that the current total liquidity of the banking system is at a reasonable and sufficient level, and no reverse repurchase operations will be carried out on that day. As of that day, the reverse repurchase operation in the open market has been suspended for a month and a half, and the length of time is rare in recent years.
At the National Standing Conference held on May 13, it was emphasized that hedging the macro-control hedging, giving full play to the fiscal, monetary, social security, and employment policies, and implementing more precise control around the "six guarantees" and "six stability."
Regarding the subsequent monetary policy, CICC pointed out that there is still a high probability that it will continue to relax to cope with the increase in the supply of government bonds and local bonds.
Shanxi Securities stated that, unlike the advanced layout of the monetary policy in the initial stage of the domestic epidemic, the potential for future monetary policy is to strengthen reserves to cope with risks. Considering that the epidemic has a greater impact on the economy, it is still necessary for monetary policy to enhance the prospectiveness, precision, initiative and effectiveness of regulation, further grasp the strength and rhythm of liquidity investment, and focus on various types of short, medium and long term Quantitative monetary policy tools are still used with high probability, and the low interest rate environment is expected to continue in the medium term. (Sino-Singapore Jingwei APP)