On December 6, the People's Bank of China decided to lower the deposit reserve ratio of financial institutions by 0.5 percentage points on December 15, which would release about 1.2 trillion yuan in long-term funds.
The RRR cut this time has both speed and strength.
On December 3, Premier Li Keqiang said in a video meeting with IMF President Georgieva that the RRR will be lowered in due course to increase support for the real economy, especially small, medium and micro enterprises.
Only one weekend apart, the RRR cut quickly landed.
The RRR cut will bring about 1.2 trillion yuan in long-term funds to the real economy, and the intensity is not small.
Such speed and intensity conveyed my country's determination as a large and responsible developing country to ensure the smooth and healthy operation of the economy.
At this time, there is both space and necessity to reduce the RRR.
In recent years, my country’s deposit reserve ratio has been reduced, but it is still at a relatively high level in the world, and there is still room for a reduction in the reserve requirement ratio.
After the RRR cut, the weighted average deposit reserve ratio of financial institutions was 8.4%.
The current situation at home and abroad is complex and severe, and my country's economy is facing new downward pressure, and it faces many challenges to continue to maintain a stable operation on a high base.
The GDP growth rate in the third quarter fell to 4.9% year-on-year, and the two-year average growth rate was 4.9%, which was lower than market expectations.
The recent rise in bulk commodities has been curbed, and power supply tensions have eased. In November, the PMI index returned to above the line of prosperity and decline, indicating that the economic prosperity has rebounded. However, the foundation for the recovery of small, medium and micro enterprises is still unstable and further policy support is needed.
The RRR cut at this time is precisely to increase support for the real economy, especially small, medium and micro enterprises.
On the one hand, the RRR cut can effectively increase the long-term stable funding sources of financial institutions to support the real economy, and strengthen the financial institutions’ ability to allocate funds.
On the other hand, after the RRR cut is implemented, it will be able to reduce the cost of financial institutions by 15 billion yuan each year. This part of the funds will also be transferred to enterprises through financial institutions to promote the further reduction of social comprehensive financing costs.
The RRR cut will be implemented at the end of the year, which will help stabilize the expectations of market entities, provide incremental funds to help companies get out of difficulties, and further enhance their confidence in business development next year.
As the New Year's Eve is approaching, the RRR cut will have the effect of smoothing the New Year's economic fluctuations and strengthening cross-cyclical adjustments, ensuring that my country's economy will continue to operate within a reasonable range from the end of the year to next year.
It needs to be emphasized that the RRR cut does not mean "sweeping floods", and the prudent monetary policy orientation has not changed.
On December 6, the Politburo meeting of the CPC Central Committee emphasized that next year's economic work must take the lead and seek progress while maintaining stability.
A prudent monetary policy must be flexible and appropriate to maintain reasonable and sufficient liquidity.
This shows that soundness will remain the main tone of next year's monetary policy.
The downgrade is a regular operation of monetary policy. A part of the released funds will be used by financial institutions to return the maturing medium-term loan facility (MLF), and part of the funds will be used by financial institutions to supplement long-term funds to better satisfy market players. need.
Next, my country's monetary policy will still be based on me, adhere to the normal monetary policy, and maintain the continuity, stability, and sustainability of the policy.
Monetary policy will continue to increase support for the real economy, improve forward-looking and autonomy, and at the same time, through structural policies to guide financial institutions to continue to increase support for small, medium and micro enterprises, green development, technological innovation and other key areas and weak links , To create a suitable monetary and financial environment for high-quality development and supply-side structural reforms.
(Source of this article: Economic Daily Author: Jin Guanping)