(Economic Observation) Three key words to see China's overall RRR cut
China News Service, Beijing, July 10th, title: Three key words to see China's overall RRR cut
China News Agency reporter Xia Bin
Only two days after the recent executive meeting of the State Council of China proposed "appropriate use of monetary policy tools such as RRR cuts", the People's Bank of China put the "boots on the ground" and came up with a comprehensive RRR cut that exceeded market expectations.
The central bank said that, except for some county-level legal person financial institutions that have implemented a 5% deposit reserve ratio, other financial institutions generally lowered the deposit reserve ratio by 0.5 percentage points, and the RRR cut released about 1 trillion yuan in long-term funds.
Why did you decide to implement a comprehensive RRR cut at this time?
Does this move change the orientation of monetary policy?
What impact will it bring to the market?
The answers to these questions constitute the three key words behind the RRR cut.
Data map: People's Bank of China.
Photo by China News Agency reporter Zhang Xinglong
Relieve stress
Since the beginning of this year, affected by the continuous increase in commodity prices, the impact of the superimposed epidemic has not yet completely subsided, and enterprises are facing greater operating pressure.
“This requires continued measures to help the real economy, especially the development of small, medium and micro enterprises.” Liang Si, a researcher at the Bank of China Research Institute, pointed out that unlike tools such as reverse repurchase and MLF (mid-term loan facility), the flow released by the RRR cut Liquidity is the asset of financial institutions, which does not need to be repaid and has no cost. This will directly increase the long-term and stable liquidity source of financial institutions, help stabilize the liquidity acquisition expectations of financial institutions, optimize the liquidity term structure, and alleviate financial institutions Pressure on the debt side.
Wang Qing, chief macro analyst at Oriental Jincheng, pointed out that in order to cope with the rapid increase in industrial product prices, regulators have adopted various measures to ensure supply and stable prices since May, and have stepped up efforts to crack down on speculative behavior in the currency market for commodities. , While paying attention to the effective guidance of market expectations.
He further stated that the reduction of the guidelines is to increase support for the real economy, especially small and micro enterprises, in terms of credit availability and corporate financing costs. Part of the measure.
Orientation unchanged
The outside world is worried that the RRR cut will release a lot of liquidity. Does this mean that China's monetary policy is going to be loose?
"The orientation of prudent monetary policy has not changed." The relevant person in charge of the People's Bank of China gave this answer.
Cheng Shi, chief economist and managing director of ICBC International, told reporters that the current RRR cut shows the policy tone of China’s monetary policy of "self-centered and stable character at the head" and new features of "relaxation and tightness, and a degree of relaxation". feature.
From the perspective of the internal environment, he pointed out that in the second half of the year, China’s economy will face the pressure of “one up and down”, that is, the economic growth rate will decline and the impact of inflation will increase. The gate is not loose and flood irrigation is not carried out; the deposit reserve interest rate and the targeted support policy are not tight to ensure a steady flow of blood transfusions to the real economy by financial institutions and enhance precise drip irrigation.
From the perspective of the external environment, in the context of global supply shocks causing global stagflation risks and Fed policy adjustments, the Chinese monetary authority has maintained its strength and fully grasped the relative advantage of monetary policy in a normal range, and has shown that Better policy tension.
Liang Si pointed out that the RRR cut will have a limited impact on the total liquidity, and the liquidity environment will not be significantly loosened.
In addition to the withdrawal of part of the liquidity on the day of the RRR cut and the avoidance of the tax period that will interfere with the total liquidity, it is expected that certain regulatory measures will be adopted to guide the flow of funds of financial institutions to better support small and medium-sized enterprises. The purpose of the development of micro-enterprises, so the funding environment will not be significantly relaxed.
lower the cost
The RRR cut has released long-term cheap funds, which will help reduce bank financing costs, thereby better serving enterprises to reduce costs.
Li Chao, chief economist of Zheshang Securities, pointed out that it is more urgent to reduce the comprehensive financing cost of enterprises than to reduce the actual financing cost. The RRR cuts to release long-term funds and reduce bank financing costs are more helpful in reducing enterprises’ capital guarantees, financing costs, and financing costs. The comprehensive financing costs of various aspects such as hidden costs can better promote financial services to the real economy.
Wen Bin, chief researcher of China Minsheng Bank, also said that the RRR cut can not only increase the proportion of long-term funds of financial institutions and optimize the capital structure, but also encourage and guide financial institutions to further reduce the financing costs of the real economy, creating a creation for the stable operation of enterprise production and operation and the economy. An appropriate level of interest rates.
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