News background:

　　On July 9, the RRR was lowered for the first time this year.

The People's Bank of China has decided to lower the deposit reserve ratio of financial institutions by 0.5 percentage points on July 15, 2021, which will release about 1 trillion yuan in long-term funds.

Both operating space and necessity

　　Data show that the increase in CPI (Consumer Price Index) and PPI in June fell slightly compared with that in May.

The market generally expects that the peak of the PPI this year has passed, and inflation during the year will be generally controllable and will not impede monetary policy, which opens up room for RRR cuts.

At the same time, after the RRR cut, the weighted average deposit reserve ratio of financial institutions remains at a reasonable level.

　　The central bank pointed out that “the prices of some commodities have continued to rise this year, and some small and micro enterprises are facing operating difficulties such as rising costs.” The purpose of the RRR cut is to “optimize the capital structure of financial institutions, improve financial service capabilities, and better support the real economy.” Previously, In response to the increase in commodity prices, the executive meeting of the State Council also directly required the implementation of direct monetary policy tools, increased re-lending and rediscount support to support inclusive finance, implemented policies such as financing guarantees for small and micro enterprises, including fee reductions, rewards and subsidies, and guided banks to expand credit loans .

Reduce the financing cost of the real economy

　　Currently, loans are still one of the main sources of corporate financing.

However, the banking financial institutions are facing the problem of high debt costs, and the situation of "dare to lend, unable to lend, and unwilling to lend" still exists to a certain extent.

Implementing a comprehensive RRR cut at this time can provide banks with more long-term and stable low-cost funds, which will help encourage and guide financial institutions to further reduce the financing costs of the real economy, and create a suitable level of interest rates for the production and operation of enterprises and the stable operation of the economy. .

　　From an international perspective, in the context of the Fed’s signal of a monetary policy turn, China’s monetary policy still maintains its strength and does not follow operations, but adheres to its normal monetary policy, which is mainly based on me.

At this time, appropriate adjustments based on the needs of the domestic real economy will help my country's economy seek a dynamic balance between stabilizing growth, controlling inflation, preventing risks, and promoting reforms under the complex background of coexisting internal and external pressures.

Does not mean a shift in monetary policy

　　In 2020, in response to the epidemic, the central bank increased financial policy support, which gradually became normal after May, and has basically returned to the normal state before the epidemic in the first half of this year.

The RRR cut is a routine operation after the monetary policy returns to normal. A part of the released funds will be used by financial institutions to return the MLF (Mid-term Lending Facility) that expires, and a part of the funds will be used by financial institutions to make up for taxes in mid-to-late July The liquidity gap caused by the peak period increases the proportion of long-term funds of financial institutions.

On the whole, the total amount of liquidity in the banking system will remain basically stable, and the orientation of prudent monetary policy will remain unchanged.

　　As one of the few major economies that implemented normal monetary policies during the epidemic, my country adheres to the stability and effectiveness of monetary policies, and does not engage in flooding, but uses precise force.

The RRR cut this time does not mean a policy shift, and the orientation of prudent monetary policy has not changed.

The timely adjustment of my country's monetary policy is mainly based on the needs of the development of the real economy.

It can be expected that this timely and accurate release of funds will escort the smooth operation of China's economic ships and create a suitable monetary and financial environment for high-quality development and supply-side structural reforms.

Micro-speaking and meaning:

　　@千千: The overall RRR cut is "great rain", but it is not "big water".

　　@一花一草: Timely RRR cuts can better support the real economy.

　　@天晴: The real economy urgently needs financial support, and this RRR cut is particularly necessary.

After the compilation of China Economic Net:

　　It should be noted that the central bank's overall reduction of the RRR is to promote the steady and moderate reduction of comprehensive financing costs on the basis of insisting not to engage in flood irrigation, so as to make precise efforts to support the development of the real economy.

In addition, the RRR cut will also have a cumulative effect with a series of support measures such as fee cuts and benefits in the earlier period, which will further increase the support for small, medium and micro enterprises, and create a good environment for the recovery and development of the real economy in the second half of the year.