Beijing, 9 Sep (ZXS) -- The People's Bank of China has recently intensively increased reverse repurchase operations to maintain reasonable and sufficient liquidity in the banking system.
On the 14th, the People's Bank of China announced that it carried out 1100 billion yuan (RMB, the same below) reverse repurchase operation by way of interest rate bidding on the same day, and the winning interest rate was 1.80%, the same as before, because 3300 billion yuan of reverse repurchase expired on the same day, achieving a net withdrawal of 2200 billion yuan.
It is worth noting that the PBOC carried out open market reverse repurchase operations on September 9, 7, 8, 11 and 12, amounting to RMB13 billion, RMB3300 billion, RMB3630 billion, RMB2150 billion and RMB2090 billion respectively.
Why do central banks operate intensively on reverse repos? Zhou Maohua, macro researcher of the financial market research department of China Everbright Bank, told China News Agency that the recent market interest rate is higher than the policy interest rate, reflecting the increase in the short-term capital demand of institutions, mainly because of the large maturity of open market operating tools this month, the accelerated pace of local bond issuance, the increase in credit investment by banks, and the short-term capital situation caused by factors such as the approaching end of the quarter.
Zhou Maohua further said that the central bank has recently moderately increased the intensity of open market operations to meet the short-term liquidity needs of institutions and smooth out short-term capital market fluctuations. Judging from the recent fluctuations in market interest rates, the overall operation of the capital is stable, and it is expected that the market liquidity is expected to continue to remain reasonable and abundant.
What is the future funding situation? What will the central bank do about it? According to statistics from financial information service company WindWande, 2.4 trillion yuan of MLF (medium-term lending facility) will expire in the remaining months of this year. Among them, 9 billion MLF will expire on September 15. In addition, there was 4000 billion yuan on October 10, 17 billion yuan on November 5000, and 11 billion yuan on December 15.
Pang Ming, chief economist and director of research department of JLL Greater China, predicts that the upcoming MLF operation is more likely to be a continuation of excess parity to release liquidity, stabilize market expectations, maintain a suitable capital environment, appropriately hedge against factors such as the accelerated issuance of special bonds, and moderately reduce the cost of bank liabilities.
"Considering that the current MLF interest rate is already relatively low, and the effect of the previous interest rate cut still needs time to be reflected, the loose monetary instrument may still be prioritized with RRR reduction, and monetary policy still needs to be based on me and adjusted in a timely manner according to the domestic macroeconomic and price situation." Considering the high real interest rate against the backdrop of insufficient inflation, there is still the need and possibility of further interest rate cuts after the opportunity window for RRR cuts in September. Pang said.
Wen Bin, chief economist of China Minsheng Bank, believes that in order to achieve multiple purposes such as policy coordination, stable liquidity, stable credit and cost reduction, there is still the possibility of reducing the RRR in the fourth quarter of this year; Structural and policy-based financial instruments are also expected to increase their weight, give play to the role of "quasi-fiscal" and precise drip irrigation, expand investment, promote consumption, vigorously support scientific and technological innovation, green development and the development of small and medium-sized enterprises, and continue to support the adjustment and optimization of the real estate market.
At the same time, in order to improve the efficiency of policy transmission, more attention will be paid to guiding funds into entities to achieve reasonable growth in quantity and effective improvement in quality.
Zhou Maohua also mentioned that it is not ruled out that the subsequent central bank will appropriately increase the investment of long-term and low-cost liquidity through RRR cuts and structural tools, guide financial institutions to increase support for weak links and key areas of the real economy, better coordinate with fiscal and other policies, and meet the cross-quarter capital needs of institutions, so as to boost market confidence and accelerate economic recovery. (End)