The policy interest rate remains unchanged releases a sound signal

  Our reporter Yao Jin

  On July 15, the overall RRR cut was formally implemented, releasing about 1 trillion yuan in long-term funds.

On the same day, the People’s Bank of China announced that, taking into account the current tax peak and other factors, financial institutions still have a certain demand for medium and long-term funds. In order to maintain a reasonable and sufficient liquidity in the banking system, the People’s Bank of China has launched a medium-term loan facility of 100 billion yuan (MLF). ) Operations and 10 billion yuan reverse repurchase operations.

However, from the perspective of transaction results, both the medium-term lending facility (MLF) and the open market reverse repurchase interest rate have remained unchanged, reflecting that the orientation of prudent monetary policy has not changed.

  Wang Qing, chief macro analyst at Oriental Jincheng, said that a total of 400 billion yuan of MLF expired on the 15th in July, and 100 billion yuan of MLF operations were implemented on that day. The remaining 300 billion yuan that expired was replaced by long-term funds released by a comprehensive RRR cut. The “long-term exchange of shortcomings” is conducive to optimizing the capital structure of financial institutions including banks, helping to reduce banks’ long-term liquidity constraints, and enhancing banks’ credit lending capabilities.

In addition, the central bank implemented a 100 billion yuan MLF operation this month, with the operating interest rate unchanged, and the continuity of the monthly release of the medium-term policy rate can also be maintained.

  "The MLF operating interest rate remained unchanged in July, indicating that there is no need to lower the policy interest rate to promote the reduction of comprehensive financing costs for small and micro enterprises. It also means that the overall RRR cut does not mean that the monetary policy has turned to easing." Wang Qing believes that the MLF operating interest rate this month has not Make adjustments to release two signals: First, the policy interest rate remains unchanged, indicating that the overall RRR cut is more of a targeted support measure for the real economy such as small and micro enterprises, rather than a full-scale monetary policy shift from quantity to price; In the context of the intensified “scissors gap” between PPI and CPI, focusing on promoting the reduction of financing costs for small and micro enterprises, the supervisory authorities gave priority to reducing the RRR, while the policy interest rate, which is more meaningful for policy signals, remained unchanged, reflecting that monetary policy is still focusing on steady growth , Maintain a balance between risk prevention and inflation control.

  Regulators have repeatedly stated that to observe whether the monetary policy orientation changes, it mainly depends on whether the policy interest rate changes.

According to Zhang Jiqiang, chief researcher of Huatai Securities' fixed income, the RRR cut is essentially a quantitative tool, and the interest rate cut represents a change in the orientation of monetary policy.

The absence of interest rate cuts indicates that the orientation of monetary policy remains unchanged, and that the central bank has not implemented "flood flooding". It also proves that the RRR cut is a routine operation after the return of monetary policy to normal.

  "Looking forward to the second half of the year, the medium-term policy interest rate represented by the MLF operating interest rate is expected to remain unchanged." Wang Qing believes that, on the one hand, the "scissor gap" between PPI and CPI will continue for some time in the second half of the year, and the overall rate is in the middle and lower reaches. The business environment of the real economy such as small and micro enterprises is under pressure and needs monetary policy support.

As a result, the second half of the year does not have the conditions to raise the policy interest rate.

On the other hand, this year global prices have shown a significant momentum of heating up, and regulators need to stabilize market inflation expectations.

While implementing comprehensive management of the high increase in PPI, it is especially necessary to prevent the high increase in PPI from being transmitted to the CPI and control the risk of overall inflation.

In this context, it is also more difficult to lower the policy interest rate.

  It is worth noting that after the formal implementation of the full RRR cut, the funds were not too loose in the morning on the 15th, and the bond market even saw a trend of high diving.

Judging from the performance of the morning market, affected by the peak of the tax period, the market capital was relatively stable in the morning on the 15th, and the short-term repurchase interest rate in the inter-bank market rose slightly.

In the bond market, the recent continuous surge has accumulated a large increase, coupled with the elimination of interest rate cut expectations, prompting market transactions to return to rationality.

  In this regard, analysts explained that because July is a traditional tax month, in normal years from 2016 to 2019, the increase in fiscal deposits in July was about 1 trillion yuan on average.

The payment of taxes and the maturity of the MLF have largely absorbed the effect of RRR cuts.

However, the freezing of liquidity by fiscal taxation is not long-term, and the cost of funds released by the RRR cut is much lower than that of the MLF.

Therefore, it is expected that at the end of the month, as fiscal expenditures increase, the impact of RRR cuts on liquidity will be more apparent.

In the future, money market interest rates will continue to fluctuate around open market operating interest rates, and there may not be much room for further declines in bond market interest rates.

  Our reporter Yao Jin