The pace of monetary policy differentiation in the world's major economies is accelerating.

After raising interest rates in March, expectations for the Federal Reserve to continue raising interest rates have intensified, and the market generally predicts that the reduction of the size of the balance sheet may start in May.

While the monetary policies of the central banks of the United States and Europe have turned from loose to tight, some central banks still maintain loose monetary policies.

Focusing on the trend and impact of monetary policy in major economies around the world, this issue invites three experts to discuss.

  Moderator: Xu Xiangmei, director of the theory department and researcher of Economic Daily News

  The new round of monetary policy adjustment is fast-paced and strong

  Moderator: What is the difference between the new round of global monetary policy adjustment and the previous round?

  Lou Feipeng (Researcher of Postal Savings Bank of China): The new round of monetary policy adjustment refers to the process of monetary policy in major economies around the world from expansion to contraction and differentiation since the outbreak of the new crown pneumonia epidemic.

  This round of monetary policy expansion began after the outbreak of the new crown pneumonia epidemic.

In response to the impact of the epidemic, in March 2020, about 40 central banks around the world cut interest rates more than 50 times. The Federal Reserve, the Bank of England and the Bank of Canada lowered their policy interest rates to around zero, and emerging economies also cut interest rates.

The central banks of the United States, Europe and Japan have provided ample liquidity by expanding the scale of monetary policy operations, restarting or increasing asset purchase programs, and creating directional support liquidity tools.

According to the statistics of various central banks, the balance sheets of the Federal Reserve, European Central Bank and Bank of Japan will expand by 76.8%, 49.5% and 22.6% respectively in 2020.

During this period, my country's monetary policy has also stepped up its efforts. Through the medium-term lending facility (MLF) and open market operations, the winning bid rate has dropped by 30 basis points, driving the market interest rate center downward, and the 1-year loan market quoted rate (LPR) has fallen synchronously.

More than 9 trillion yuan of monetary policy support measures have been provided through tools such as RRR cuts, medium-term lending facilities, re-lending, and re-discounting.

  From 2021, the current round of monetary policy adjustment will shift from expansion to contraction, and the "wave of interest rate hikes" will begin.

Nearly 30 central banks around the world raised interest rates, and the central banks in Latin America were the main force in raising interest rates. The central banks of South Korea and Russia also took measures to raise interest rates. The central banks of Brazil and Russia raised interest rates 7 and 6 times respectively throughout the year.

In December 2021, the UK raised interest rates for the first time since the outbreak.

Since the beginning of 2022, the Bank of England has raised interest rates twice, and many central banks such as Brazil, Chile, and Poland have announced interest rate hikes.

The Fed began tapering its bond purchases (Taper) in mid-November 2021, and has since accelerated.

In March 2022, the Fed will raise interest rates, saying that it will continue to raise interest rates or even more aggressively, and hinting that it may start to shrink its balance sheet in May.

Driven by the Fed's rate hike, many countries followed suit.

Recently, the European Central Bank also changed its position of not raising interest rates in 2022, accelerating the progress of reducing the asset purchase plan.

  However, not all central banks have opted to contract.

The Bank of Japan is relatively dovish, maintaining an ultra-loose monetary policy.

Central banks such as Turkey did the opposite, opting to cut interest rates.

my country maintains a prudent monetary policy and insists on focusing on me. In 2021, the RRR will be lowered twice, the re-lending interest rate for supporting agriculture and small-scale enterprises will be lowered, and the interest rate of reverse repurchase, medium-term lending facility, and standing loan facility (SLF) will be lowered. , to guide the 1-year and 5-year loan market quoted interest rates to decline.

On April 15, 2022, the central bank announced another RRR cut.

  Looking back at the whole process of the monetary policies of major economies around the world from expansion to contraction and differentiation, it is not difficult to see that compared with the easing of monetary policy in response to the international financial crisis in 2008 and the subsequent tightening, the new round of monetary policy adjustment is located in The economic and financial environment, the pace and intensity of adjustment vary.

  First of all, from the perspective of the economic and financial environment, before the 2008 international financial crisis, the Federal Reserve cut interest rates and the central banks of Europe and Japan raised interest rates. The country's economy is growing strongly and inflation is high.

In 2020, the global economy will be in a state of low interest rates, low growth and low inflation. The new crown pneumonia epidemic has blocked the industrial chain and supply chain. The ultra-loose monetary policy has increased demand. Deal with inflation rather than an overall upturn in the economy.

  Secondly, from the perspective of policy rhythm, this round of monetary policy has a faster rhythm than responding to the 2008 international financial crisis.

In terms of monetary policy easing, after the outbreak of the new crown pneumonia epidemic, the central banks of the United States, Europe, and Japan took rapid easing measures, such as the Federal Reserve cutting interest rates to zero and implementing unlimited quantitative easing within one month of March 2020.

After the international financial crisis in 2008, the central banks of the United States, Europe and Japan mainly adopted low interest rates to stabilize growth, and then gradually adopted an unconventional monetary policy of expanding the size of their balance sheets to increase the money supply.

The Federal Reserve implemented three rounds of quantitative easing successively. It was not until the balance sheet was reduced in 2014 and interest rates were raised at the end of 2015 that the monetary policies of developed countries were significantly differentiated.

In terms of monetary policy tightening, in 2021, not only emerging economies will begin to tighten, but the Fed's monetary policy will also be tightened. There will be differentiation between developed and emerging economies, and within developed countries.

For example, the Federal Reserve will start reducing bond purchases in November 2021, and will start raising interest rates in March 2022, at a significantly faster pace.

  Again, the adjustment strength is different.

Still taking the Federal Reserve as an example, it took six years for the Fed to implement an easy monetary policy in 2008, and the size of its balance sheet grew from less than $1 trillion to $4.5 trillion at the end of 2014.

It is less than two years since the Fed’s balance sheet grew from $4.2 trillion in February 2020 to $8.8 trillion by the end of 2021.

  At present, the new crown pneumonia epidemic is still the main factor affecting the trend of global monetary policy.

Different countries have different epidemic development and prevention and control situations. High inflation requires tighter monetary policy to respond, which determines the divergence of global monetary policy, especially the divergence between my country's easing and the United States' tightening.

In 2022, the Fed will reduce bond purchases, raise interest rates, and possibly shrink its balance sheet, which will push up U.S. bond yields and trigger a return of international capital. Emerging economies face the risk of capital outflow and exchange rate depreciation, and the probability of passive monetary policy adjustment is relatively high. big.

my country's macro economy is large and resilient, the monetary policy remains stable and flexible, the RMB exchange rate is more flexible, and the financial system is more autonomous and stable.

  Emerging economies need to be wary of unexpected risks

  Moderator: How will the tightening of monetary policies in major economies affect emerging economies and what risks need to be guarded against?

  Yang Panpan (Deputy Director of the International Finance Research Office, Institute of World Economics and Politics, Chinese Academy of Social Sciences): The impact of the tightening of monetary policy in developed economies on emerging economies is mainly from three dimensions: history, fundamentals and new conditions.

  From a historical perspective, since the Federal Reserve has gone through a complete cycle of interest rate cuts, quantitative easing, QE exit, and interest rate hikes after the 2008 international financial crisis, analyzing the trend of emerging markets when the U.S. Federal Reserve exited quantitative easing at that time can show that as a reference to the current situation.

At that time, whether it was the exit of quantitative easing or the process of raising interest rates, the financial markets of emerging economies were significantly affected.

Due to tightening liquidity, narrowing interest rate spreads, and rising risk aversion, emerging economies generally experienced capital outflows and asset allocation adjustments, resulting in exchange rate depreciation and sharp adjustments in domestic asset prices represented by stock market indices.

But it needs to be emphasized that the last round of tightening affected emerging economies more through expected channels.

When the Fed discussed quantitative easing tapering (May-December 2013) and interest rate hikes (January-December 2015), major currencies in emerging economies depreciated and stock market prices went down; and when the Fed formally implemented quantitative easing tapering (2013 From December 2014 to October 2014) and interest rate hikes (after December 2015), exchange rates and stock prices in emerging economies mostly started to recover.

The reason is that the Fed's withdrawal from quantitative easing and interest rate hikes are the first time in history. The market does not know what the consequences of the tightening will be. This uncertainty is transmitted through the expected channel and dominates market sentiment and financial market trends.

  Different from the previous round, during the exit process of quantitative easing policies in developed economies this round, the market and the governments of emerging economies have a clearer reference to the historical exit path, and the Federal Reserve’s foreign policy communication and guidance on expectations are also more clear.

This makes the exit path of monetary policy in this round after multiple rounds of adjustment, but it is more carried out in the way of "small step fine-tuning", policy tightening is easier to predict, and the uncertainty and market volatility brought by the expected channel will be reduced accordingly. Emerging markets Relevant currencies and asset prices did not experience significant volatility.

  From the perspective of fundamentals, the spillover effects of developed economies exiting quantitative easing policies are closely related to the fundamentals of emerging economies. Economies with better economic fundamentals suffer relatively small negative spillover effects when faced with tightening policies.

The indicators that affect the capital flow of emerging economies mainly include inflation level, current account level and government debt situation.

Considering the current fundamentals of the major emerging economies of the BRICs and ASEAN compared with the situation before the last round of the Fed's withdrawal from quantitative easing, we can find that: First, the inflation level of emerging economies has eased significantly, and the ease of inflation will help a The relative stability of the national currency.

Second, the current account of more emerging economies improved.

The balance of payments crisis is an important form of the crisis in emerging economies. The current account deficit means that more international financing is needed to meet domestic demand. The improvement of the current account balance can help strengthen the ability of emerging economies to resist capital outflows.

Third, the government debt of most emerging economies has risen considerably. From this perspective, the economies face certain vulnerabilities.

In response to the epidemic, emerging economies have adopted fiscal relief and easing policies, and government debt has risen more.

Rising government debt makes fiscal policy less responsive to the shock of monetary tightening in advanced economies.

  Therefore, from the perspective of the current fundamentals of major emerging economies, although the fiscal deficit has increased due to the epidemic and other reasons, the inflation level and the balance of payments have improved, and the economic fundamentals of most economies are sufficient to cope with the monetary policies of developed economies. However, we still need to pay attention to unexpected shocks, and some countries and regions with relatively fragile economies are still at risk.

  From the perspective of the new situation, several factors are worthy of attention.

The first is the policy trend after the Fed started the process of raising interest rates.

Different from the previous round, after the start of the Fed rate hike process, it may start the process of reducing the balance sheet at a faster speed.

From the perspective of the impact mechanism of interest rate hikes and balance sheet reductions, interest rate hikes mainly affect short-term interest rates, while balance sheet reductions affect long-term interest rates. For emerging markets, capital flows are more clearly affected by the short-term impact. The mix will not exacerbate negative spillovers, but the downside from the expected channel remains to be seen.

Second, the recent turmoil in the international commodity market, the rising commodity prices will be transmitted to emerging market countries, pushing up the inflation level of major emerging economies and weakening their economic fundamentals in response to monetary policy tightening.

Third, the pressure on the Fed itself is increasing. In the face of further rise in inflation pressure and the peak of cyclical economic expansion has passed, it will become more difficult for the Fed to tighten monetary policy.

It is possible that another form of "taper tantrum" may occur, or first have a larger impact on the US financial market itself, and then spill over to emerging economies.

  Give full play to the dual functions of total volume and structure

  Moderator: What impact will the monetary policy of major developed economies have on my country, and how to deal with it?

  Dong Ximiao (Chief Researcher of China Merchants Union Finance): The monetary policy tightening cycle in developed economies is basically in line with expectations, and the impact on my country is relatively limited.

my country's monetary policy should continue to focus on me, strengthen forward-looking, precise and independent, strengthen implementation, stabilize market confidence, and better assist economic recovery.

  The dot plot released at the Fed's interest rate meeting on March 17 shows that the Fed will raise interest rates six times this year, and the interest rate will reach 1.9% by the end of 2022.

Next, the Fed will begin reducing its holdings of Treasuries, agency debt and agency mortgage-backed securities, shrinking its nearly $9 trillion balance sheet.

Although the rate and process of raising interest rates and shrinking the balance sheet are basically in line with market expectations, compared with the three rounds of tightening cycles in the past 20 years, this round of U.S. monetary policy tightening is relatively fast, and its impact cannot be ignored.

  The tightening of monetary and financial policies in the United States may have an impact on my country from three aspects: continued interest rate hikes in the United States will narrow the interest rate gap between China and the United States, which may exacerbate capital outflows from my country; U.S. interest rate hikes and balance sheet shrinkage may increase the adjustment of U.S. stocks, which will further exacerbate my country's capital market is volatile; if the United States accelerates the tightening process, it will cause huge turbulence in the global financial market, or affect my country's financial stability.

However, my country's economic and financial system is resilient, the capital market has been adjusted and valuations are low, and there have been expectations and preparations for the US to raise interest rates and shrink its balance sheet.

In general, the contraction of monetary and financial policies in developed economies such as the United States has limited spillover effects on my country.

  Monetary policy is an important part of my country's macro policy.

While maintaining continuity, stability, and sustainability, monetary policy should be further forward-looking, precise, and autonomous, more proactive and proactive, and give full play to the dual functions of total volume and structure.

  "Forward-looking" means to study and judge the internal and external situation for a period of time in the future and make policy adjustments in advance to maintain the stable economic and financial operation.

The current international and domestic environmental emergencies exceed expectations, and economic operation faces greater uncertainties and challenges.

The timing of policy adjustment should be appropriately advanced, and the adjustment efforts should be greater than market expectations.

"Precision" means that while monetary policy is more flexible and appropriate, it does not engage in flood irrigation, and makes better use of structural monetary policy tools to accurately drip irrigation into key areas and weak links of economic development.

Various measures should be taken to guide more liquidity into small and micro enterprises, technological innovation, green development, and rural revitalization.

"Independence" means that in the face of uncertain internal and external environments, monetary policy adheres to self-centeredness, maintains composure, actively adjusts according to the needs of economic and social development, and at the same time makes good policy reserves and strictly guards against imported financial risks.

  From the perspective of thinking, the organic combination of cross-cyclical and counter-cyclical adjustment will be the main feature of monetary policy in the future.

Counter-cyclical adjustment is mainly reflected in "reverse", that is, taking policy measures to smooth the fluctuations brought about by the economic downturn and reduce the downward pressure on the economy.

Since the outbreak of COVID-19, my country's monetary policy has stepped up counter-cyclical adjustments to boost the steady recovery of the economy and society.

In 2022, the pressure to stabilize growth and prevent risks is still great, and cross-cycle adjustment policy measures are still needed.

Cross-cycle adjustment is mainly reflected in "cross", that is, spanning a certain period in the time span, such as making cross-year arrangements for certain policies.

The organic combination of cross-cyclical and counter-cyclical control policies should not only focus on the current difficulties and problems, but also focus on the pressures and challenges for a longer period of time.

The organic combination of inter-cyclical and counter-cyclical adjustment will also make monetary policy more forward-looking.

From an operational point of view, the combination of aggregate tools and structural tools will be the main feature of monetary policy in the future.

my country's macro-economy is facing both cyclical and structural problems, so monetary policy needs to work together from the total amount and structure.

  In the next stage, we should increase the implementation of monetary policy from four aspects, maintain a more reasonable and sufficient liquidity, continue to increase support and services for the real economy, and maintain overall economic and social stability.

  The first is to make good use of aggregate tools in a timely manner, maintain a moderate growth in money supply, and enhance the stability of credit growth.

Affected by many uncertain factors, the downward pressure on my country's economy is still relatively large, and stable growth has been placed in a more prominent position.

This year's GDP growth target of around 5.5% will take hard work to achieve.

At present, the weighted average deposit reserve ratio of financial institutions in my country is 8.4%, which is significantly higher than that of developed economies, and there is still some room for reduction.

Tools such as the deposit reserve ratio should continue to be used to provide long-term, low-cost funds for financial institutions and enhance their willingness and ability to serve the real economy.

At the same time, it sends a clear signal to the market to stabilize growth and promote development, and stabilize market expectations and confidence.

  The second is to highlight the role of structural tools, do a good job of addition, and increase targeted "blood transfusion" in key areas, industries and enterprises.

Make good use of targeted RRR cuts, re-lending and re-discounting, and inclusive small and micro loan support tools, etc., to maintain service to small and micro enterprises and individual industrial and commercial households; make good use of carbon emission reduction support tools, and support special re-loans for clean and efficient use of coal, etc. Tools to support financial institutions to accelerate the development of green finance and promote the realization of the "dual carbon" goal.

Accelerate the implementation of two special re-loans to support technological innovation and inclusive elderly care, and guide and encourage financial institutions to increase targeted support for technological innovation and the elderly care industry.

At the same time, strengthen the monitoring and assessment of the use of funds by financial institutions, and enhance the accuracy and directness of monetary policy.

  The third is to guide the market interest rate to continue to decline, reduce the financing cost of the real economy, and stimulate the effective demand of market players.

Although the current real economy loan interest rate is at a low level, the market players do not have a strong sense of gain, and the effect of easing credit needs to be improved.

Market interest rates should be guided to continue to decline, and financial institutions should be guided in various ways to implement measures such as deferred repayment and fee reductions, so as to transfer profits to enterprises and individuals in difficulty.

  The fourth is to further unblock the monetary policy transmission mechanism and increase positive incentives for financial institutions.

The macro prudential assessment (MPA) assessment should be moderately relaxed, relevant regulatory indicators should be lowered in stages, and the willingness and ability of financial institutions to extend credit should be improved.

For small and medium-sized banks, the requirements for re-lending to support agriculture, small and medium-sized enterprises will be further relaxed, and the issuance of financial bonds and asset-backed securities will be supported to increase funding sources; small and medium-sized banks will be supported to supplement capital through the issuance of perpetual bonds, convertible bonds and other capital instruments.

At the same time, the channels for the disposal of non-performing assets will be expanded to reduce the burden on financial institutions, especially small and medium-sized banks.

Financial institutions should implement systems such as fault tolerance and correction, due diligence and exemption from liability, and improve the initiative of grassroots institutions and employees.