People's Bank of China decided to cut the reserve requirement ratio of financial institutions by 9.15 percentage points on September 0. The weighted average reserve requirement ratio of financial institutions after the reduction is about 25.7%, the second RRR cut this year. What is the effect of this RRR cut? Why was the RRR lowered at this point in time? Let's look at the interpretation.
Release about 5000 billion yuan of medium and long-term liquidity and inject "real money" into the benefits
The central bank lowered the RRR again in September, releasing medium and long-term liquidity of more than 9 billion yuan, injecting benefits into "real money", effectively encouraging financial institutions to increase capital investment in entities, macro indicators will show more positive changes, and the sustainability of the steady economic recovery will be further improved.
The specific timing of this RRR reduction will be accurately grasped to replenish the blood of the bank in a timely manner
The specific timing of the RRR reduction by the central bank was accurate, and the liquidity faced a significant increase in the impact of factors such as local bond issuance, tax period peaks, and regulatory assessments in mid-September. The issuance of local bonds is accelerating, and financial institutions are withdrawing a large amount of liquidity from subscription payments. Around the 9th of each month, it is also usually the peak of tax payment, and the liquidity pressure will increase in stages.
September is still the end of the quarter, and regulatory assessments such as liquidity indicators will also increase the liquidity demand of financial institutions. After the superposition of multiple factors, the short-term capital supply and demand changes in the market have increased, and the central bank, while weighing the medium and long-term liquidity supply, chooses the most urgent time for liquidity demand, and timely measures to protect the market.
The RRR reduction is moderately forward
Previously, many market analysts believed that there was a shortage of liquidity in the medium and long term, and it was a suitable choice to hedge the recent liquidity disturbances by means such as RRR reduction, and this RRR reduction was not unexpected.
The RRR reduction is still 0.25 percentage points, excluding financial institutions that have applied a 5% reserve ratio, releasing more than 5000 billion yuan of medium and long-term liquidity, with a moderate total amount, which can not only alleviate short-term liquidity demand, but also continue to supplement medium- and long-term liquidity needs such as credit growth, cash investment, and reserve replenishment of third-party payment institutions in the coming period, reflecting the positive signal of the central bank accurately and appropriately replenishing the blood of banks and carefully protecting market liquidity. After the RRR cut, the total liquidity of the banking system remained basically stable, and there was no flooding.
Most importantly, the policy effects of two interest rate cuts and two RRR cuts this year will continue to be released in a pulsar manner, and the confidence, determination and ability of the central bank to implement prudent monetary policy accurately and effectively have been further reflected.
The RRR cut comes at a critical moment in the relay of economic recovery
After the central bank cut interest rates and optimized real estate financial policies, it lowered the RRR for the second time this year, and unswervingly promoted the sustained recovery and recovery of the economy. Recently, the macro policy combination has been decisively and continuously, and the fiscal taxation, real estate, and monetary policies have successively made efforts, and the market is expected to improve significantly, but the resilience of economic recovery still needs to be enhanced, and the second RRR reduction will continue to reflect the policy support effect.
The downward space of financing costs in the real economy has been further opened
Prior to this RRR cut, the central bank has lowered the RRR once and twice this year, and the financing cost of the real economy has fallen significantly. According to central bank data, from January to August, corporate loan interest rates have fallen to a historical low since statistics began, and personal housing loan interest rates have also fallen sharply by 1.8 percentage points year-on-year.
At present, the net interest margin of China's commercial banks has narrowed significantly compared with 2019, and the central bank has lowered the RRR again, which can continuously optimize the liquidity structure of commercial banks and financial markets, reduce the cost of funds on the liability side of banks, further open up the downward space of asset-side loan interest rates, promote the steady reduction of corporate financing and residential credit costs, and further improve the ability of finance to yield profits to entities, and increase the intensity of stable investment and employment.
Money market interest rates continue to stabilize
Affected by multiple factors such as tax payment and bond issuance payment, the 7-day reverse repurchase rate in the money market has generally operated at a level slightly higher than the open market operation interest rate in recent times, and the interest rate differential with the overnight interest rate has narrowed. The RRR reduction by the central bank has timely optimized the liquidity structure of commercial banks and financial markets, and played a role in maintaining the basic stability of interest rates in the money market. The money market 7-day reverse repo rate will continue to run smoothly around the open market operating rate.
Price levels are expected to recover moderately
With the recovery of market confidence and the further manifestation of policy transmission effects, the smoothness of economic circulation has improved, and inflation has recently undergone positive changes, with CPI turning positive year-on-year in August, and PPI year-on-year decline for two consecutive months. The RRR reduction continues to strengthen the stamina of financial support to expand domestic demand, which is conducive to further giving full play to the early driving role of financial resources and supporting the sustained moderate recovery of inflation indicators.
(CCTV reporter Sun Yan)