Recently, the People's Bank of China decided to lower the deposit reserve ratio of financial institutions by 0.5 percentage points on July 15, 2021 (excluding financial institutions that have implemented a 5% deposit reserve ratio).

On July 13, Sun Guofeng, Director of the Monetary Policy Department of the People's Bank of China, responded at the press conference of the State Council Information Office that the RRR cut is a routine liquidity operation after the return of monetary policy to normal, and the orientation of prudent monetary policy has not changed.

　　Wang Yiming said that my country's monetary policy has basically returned to the normal state before the epidemic.

"Since 2020, my country has adhered to a normal monetary policy, which not only strongly supports the real economy, but also does not engage in flooding. The People's Bank of China has grasped the pace and intensity of the implementation of a sound monetary policy in accordance with the domestic epidemic prevention and control and economic and financial situation. From April to April, due to the severe impact of the epidemic on the domestic economy, the monetary policy response was relatively large. After May, the intensity gradually became normal." He said.

　　Wang Yiming said that the overall RRR cut is a routine liquidity operation after the monetary policy returns to normal.

The orientation of prudent monetary policy has not changed.

　　In response to the media’s suggestion on how the central bank should respond to the external shocks brought about by the Fed’s interest rate hike, Sun Guofeng said that from the perspective of China’s financial market, the interest rate of China’s 10-year treasury bond is currently around 3%, which is still lower than the previous period. The exchange rate fluctuates in both directions, and the financial market maintains stable operation.

Therefore, the discussion about the Fed's monetary policy shift has relatively small impact on China's monetary policy and financial market.

(Reporter Lang Jiahui produces Zhou Jing)

Editor in charge: [Chen Haifeng]