China News Service, Beijing, July 20 (Reporter Xia Bin) In order to disperse the "dark cloud" of high inflation, major economies began to tighten monetary policies, setting off a global "wave of interest rate hikes".
In March this year, the Federal Reserve officially entered the interest rate hike cycle. Under the predicament of its inflation data hitting a new high in more than 40 years, there may even be a single 100 basis point interest rate hike in July; the euro, which also suffers from the "pain" of inflation The region will also adjust interest rates, with the European Central Bank deciding to raise interest rates for the first time in 11 years in July.
In this round of "interest rate hikes", more countries outside the United States and Europe are involved.
On July 13 alone, the central banks of South Korea, New Zealand, and Canada all announced to raise interest rates. Among them, South Korea and New Zealand raised interest rates for the third time this year, while Canada directly raised interest rates by 100 basis points at one time. The benchmark interest rate was raised to 2.5%, making Canada the first G7 member to raise rates this sharply in this economic cycle.
According to incomplete statistics, as of the end of June, global central banks have raised policy interest rates more than 80 times this year, the most in history.
The era of ultra-easy monetary policy is coming to an end for central banks around the world, said Kristina Hooper, chief global market strategist at Invesco.
In June, the Swiss National Bank decided to raise interest rates by 50 basis points, which was the first time in 15 years. It should be noted that Switzerland does not have the same high inflation as other western developed countries. However, considering the high inflation in many other countries, its The motivation for raising interest rates may be to prevent the risk of the second-round effect.
Hooper believes that the SNB's decision is a symbol of how Western developed market central banks are moving towards normalizing monetary policy in the face of high inflation in many parts of the world.
“For the first time in decades, these central banks have largely changed their mindset and have had to do so in the face of higher, longer-lasting, broader inflation and rapidly rising inflation expectations.”
What impact will the global "interest rate hike" have?
Zhou Jingtong, deputy dean of the Bank of China Research Institute, believes that the "wave of interest rate hikes" will reverse the extremely loose global liquidity situation since the outbreak of the epidemic, and will have a profound impact on the global economy and finance.
For example, restraining global economic recovery; exacerbating turmoil in international financial markets; reversing the rising momentum of commodity markets; some emerging economies facing challenges, etc.
IMF Managing Director Georgieva has warned that a global debt crisis is brewing as central banks raise interest rates to curb inflation, raising debt-servicing costs for vulnerable countries.
How should China's monetary policy respond to the global "interest rate hike"?
Zou Lan, director of the Monetary Policy Department of the People's Bank of China, said that the government has taken measures such as adjusting the foreign exchange deposit reserve ratio and strengthening the macro-prudential management of cross-border capital flows for forward-looking responses in the early stage, which has reduced the impact of changes in the external environment to a certain extent. Negative spillover shocks.
"The RMB exchange rate fluctuates in both directions and is at a reasonable level, and cross-border capital flows are generally stable. At the same time, as a super-large economy, China's domestic currency and financial conditions are mainly determined by domestic factors. Monetary policy will continue to adhere to the orientation of focusing on me, taking into account Internal and external balance." Zou Lan said.
The 2022 second quarter regular meeting of the Monetary Policy Committee of the People's Bank of China mentioned that it is necessary to intensify the implementation of a prudent monetary policy, and give full play to the dual functions of the total amount and structure of monetary policy tools.
Zhong Zhengsheng, chief economist of Ping An Securities, believes that it is expected that the People's Bank of China will continue to increase the use of structural tools and support the real estate sector in the second half of the year.
However, short-term RRR cuts, interest rate cuts and other general easing policies may press the "pause button", this is because the impact of the Fed's subsequent interest rate hikes needs to wait and see, and China's economy has just started the "post-epidemic era" recovery, and a package of steady growth in the early stage The effect of the policy will take some time to verify, and the current money market funds are still relatively loose.
Lian Ping, Chief Economist and Dean of the Research Institute of Zhixin Investment, said that from a broad theoretical framework, exchange rate policy is also a monetary policy.
The exchange rate policy needs to take into account the reasonable needs of both the current item and the capital item.
Therefore, the overall monetary policy should be taken into account both internally and externally, and at the same time, the exchange rate policy should be applied well, so that the RMB exchange rate fluctuates in a basically stable range and reduce the adverse impact on the Chinese economy.