Provide a suitable liquidity environment for stable growth——

The central bank launches trillion-dollar "spicy powder" operation

Our reporter Yao Jin

  On November 15, the mid-month "spicy noodle" operation, which has attracted much attention from the market, was carried out as scheduled.

The People’s Bank of China issued an announcement stating that in order to maintain reasonable and sufficient liquidity in the banking system, it carried out a medium-term loan facility (MLF) operation of RMB 1,000 billion on the same day (including the renewal of the two MLF maturities on November 16 and 30) and RMB 10 billion. The Yuan reverse repurchase operation fully met the needs of financial institutions.

  It is worth noting that this month's MLF operating interest rate is still 2.95%, the same as in October, and has maintained this level for 20 consecutive months; the total maturity of the two batches of MLF that month is 1 trillion yuan, so the MLF this month is equal Continue to do volume parity.

  This is the third consecutive month that the central bank has continued to do MLF with high amounts.

Wang Qing, chief macro analyst at Oriental Jincheng, believes that the MLF maturity volume in November was the highest level of the year, and the central bank implemented the same amount to continue to do so, indicating that the policy continues to support moderately easy bank liquidity in the medium and long term.

  "The continuation of the huge amount of MLF will help commercial banks prepare for the peak issuance of new local government special bonds. The issuance of new local government special bonds will enter the high-density stage in mid-to-late November. The issuance volume is estimated to be around 900 billion yuan. This is higher than last month.” Wang Qing said, we have noticed that after the central bank’s RRR cut in July, the medium-term liquidity of the banking system has entered a loose state, represented by the maturity rate of 1-year commercial bank (AAA) interbank certificates of deposit. The mid-market interest rate is about 20 basis points lower than the medium-term policy interest rate (MLF interest rate).

  In this situation, the central bank still chose to continue the MLF with a huge amount in November, which will help commercial banks cope with the upcoming peak issuance of new local government special bonds and prevent market interest rates from rising more than expected.

On the one hand, it reflects the coordination between monetary policy and fiscal policy. On the other hand, it also helps to create a more favorable monetary and financial environment for stable growth in the fourth quarter.

  As a medium-term policy interest rate, the MLF interest rate embodies the comprehensive balance of the regulatory authorities on multiple policy objectives such as economic growth, risk prevention, and price control.

China Postal Savings Bank researcher Lou Feipeng believes that MLF operations in November were relatively moderate in terms of quantity, price and timing, reflecting the maintenance of continuity and stability in monetary policy and providing a suitable liquidity environment for the market.

  Recently, in the face of increasing pressure for steady growth, market discussions on “reduction of RRR” have heated up.

In this regard, Wang Qing said that the net amount of MLF in November did not increase, or it indicates that the probability of later RRR cuts will increase.

"The October financial data released last week showed that the growth rate of credit and social financing has stabilized at a low level, and the growth rate of M2 has risen for two consecutive months. A continuous upward process. This is an important support point for stabilizing the macroeconomic operation at the end of this year and the beginning of next year and effectively controlling systemic financial risks."

  In Wang Qing's view, with the increase in the scale of credit, the banking system's need to supplement medium and long-term liquidity has also increased.

After the RRR cut in July, the mid-market interest rate represented by the 1-year commercial bank interbank certificate of deposit maturity rate began to be significantly lower than the MLF interest rate, which helped companies continue to decline in financing costs and offset the high PPI to a certain extent. Increased cost pressures on mid- and downstream small and micro enterprises have helped stabilize growth; however, as the medium-term market interest rate is significantly lower than the MLF interest rate, banks' motivation to supplement medium- and long-term liquidity through MLF also declines.

The next step is to incentivize banks to extend loans to enterprises at lower interest rates, and the demand for low-cost mid- to long-term liquidity to banks through the RRR cut will increase.

  Lou Feipeng also said that with the continuous advancement of financial concession in the real economy, the current loan interest rate is already at a low level. The second quarter monetary policy implementation report of the People's Bank of China also made it clear that the weighted average loan interest rate has reached a new low since statistics, and the bank's net interest margin is facing Greater pressure to narrow down, and to promote the formation of physical workloads at the end of this year and the beginning of next year in terms of stabilizing economic growth, to guide the rise of social financing scale, the recovery of credit and to promote the reduction of financing costs in the real economy, and the introduction of carbon emission reduction support tools through structural monetary policies On the basis of tools that provide low-cost funds for green credit, it is necessary to reduce the RRR to provide low-cost funds for financial institutions.

  Industry insiders believe that in the face of increased liquidity volatility and rising demand for stable growth before the end of the year, if purely from the perspective of liquidity management, the central bank will gradually increase the scale of reverse repurchase operations before the end of the year, and continue to do MLF with a moderate increase. , You can deal with all kinds of liquidity disturbances; if we take into account liquidity management and focus on releasing a moderate and stable growth signal, promote a faster recovery in credit and social financing, and guide the real economy to reduce financing costs, the central bank may also be possible before the end of the year. The RRR cut was implemented again.

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