How does the central bank's second RRR cut this year affect the economy and the property market?

　　China News Service, November 25th (Zhongxin Finance Gong Hongyu) After the State Council executive meeting held on November 22nd mentioned the "reduction in RRR", the central bank's RRR cut "arrived as scheduled" on the 25th.

　　This is the second time the central bank has lowered the reserve requirement ratio this year, and it is a comprehensive reduction. What important impact will it have on the economy and the property market?

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(Data map) Photo by Ai Qinglong

Release about 500 billion yuan of long-term funds

　　The central bank decided to reduce the deposit reserve ratio of financial institutions by 0.25 percentage points on December 5, 2022 (excluding financial institutions that have implemented a 5% deposit reserve ratio).

The RRR cut released a total of about 500 billion yuan of long-term funds.

　　This RRR cut is the second comprehensive RRR cut this year.

The first RRR cut was in April. At that time, the RRR was lowered by 0.25 percentage points, releasing a total of about 530 billion yuan of long-term funds.

　　Before the RRR cut, there was already a "prediction".

　　The executive meeting of the State Council held on November 22 proposed to use monetary policy tools such as RRR cuts in a timely and appropriate manner to maintain reasonable and sufficient liquidity.

At that time, in the eyes of economists, this statement indicated that a new round of RRR cuts might come soon.

Why lower the RRR at this time?

　　The central bank stated that the purpose of this RRR cut is to maintain reasonable and sufficient liquidity, maintain a reasonable growth in the total amount of money and credit, implement a package of policy measures to stabilize the economy, increase support for the real economy, and support the effective improvement of economic quality and quantity. reasonable growth.

　　The second is to optimize the capital structure of financial institutions, increase the long-term stable funding sources of financial institutions, enhance the capital allocation capabilities of financial institutions, and support industries and small, medium and micro enterprises that have been severely affected by the epidemic.

　　The third is that the RRR cut reduces the capital cost of financial institutions by about 5.6 billion yuan per year, which can promote the reduction of the comprehensive financing cost of the real economy through the transmission of financial institutions.

　　"In October, both social financing and loan increments fell. Although corporate medium- and long-term loans maintained a relatively high level of prosperity, household loan growth was weak. This reflects that effective financing demand is still insufficient, and the macro economy is facing greater downward pressure. Therefore, China's monetary policy should be further strengthened, and it

" Dong Ximiao, a researcher at the Institute of Finance at Fudan University, said in an interview with Sinonews Finance and Economics.

　　The October financial statistics report released by the central bank shows that RMB loans increased by 615.2 billion yuan in October, which was 211 billion yuan less than the same period last year due to factors such as a high base.

　　Zhang Bo, director of 58 Anju Guest House Industry Research Institute Branch, analyzed that seeking progress while maintaining stability on the financial side is an important measure to ensure the stable development of economic construction and effectively prevent and resolve risks in the real estate market.

Facing the external environment with increasing uncertainties and the continued downward pressure on the real estate market, the necessity of this RRR cut is obvious.

　　Dong Ximiao mentioned that the comprehensive RRR cut of 0.25 percentage points is in line with expectations.

On the one hand, the RRR cut immediately after a few days of the State Council executive meeting reflects "timely"; at a time when the market liquidity is relatively abundant, the RRR cut of 0.25 percentage points instead of 0.5 percentage points reflects "moderate".

How will it affect the economy and property market?

　　Wen Bin, chief economist of Minsheng Bank, said that the RRR cut will help maintain reasonable and sufficient liquidity, optimize the capital structure of the financial system, reduce the debt cost of banking institutions, and promote the reduction of corporate financing costs and personal consumption credit costs, and promote credit growth. The recovery of effective demand and the stable operation of the bond market will also play a positive role in consolidating the economic recovery and upward momentum.

　　Dong Ximiao believes that after the implementation of the RRR cut on December 5, the cost of bank funds will be reduced, and the motivation of banks to reduce the increase will be strengthened.

.

　　Regarding the impact of the RRR cut on real estate, Zhang Bo said that through this RRR

, actively prevent real estate market risks, and promote the stable and healthy development of the real estate market.

　　Li Yujia, chief researcher of the Housing Policy Research Center of the Guangdong Provincial Institute of Urban Planning, pointed out that on November 21, the central bank launched a 200 billion yuan "guaranteed housing" loan support plan for 6 commercial banks. Capital investment is mainly commercial bank credit.

　　"At the same time, the acceleration of "guaranteed housing" and the comprehensive improvement of housing enterprises' financing also require the demand side of the property market to maintain a certain degree of activity to improve the hematopoietic function of developers, which is of great help to boost the confidence of developers with external financing. "Li Yujia said.

Overlooking the buildings in Jiaxing City Photo courtesy of the Propaganda Department of the Jiaxing Municipal Party Committee

Is there room for future RRR cuts?

　　In Dong Ximiao's view, although the RRR cut is a comprehensive cut, it does not mean a shift in monetary policy, and

　　The central bank stated that it will increase the implementation of a prudent monetary policy, focus on supporting the real economy,

, take into account internal and external balance, and better leverage the dual functions of the aggregate and structure of monetary policy tools.

　　"As one of the few major economies that have implemented normal monetary policy in recent years, although my country's monetary policy has increased its support for the real economy in recent years, it has maintained a stable tone and has not issued excessive currency. And my country The price level remains basically stable, and there will be little inflationary pressure in the future." Dong Ximiao said that after the RRR cut, the weighted average deposit reserve ratio of my country's financial institutions is 7.8%, which is still at a relatively high level.

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