On February 5, the first reserve requirement ratio reduction this year was implemented. Previously, Pan Gongsheng, governor of the People's Bank of China, announced at a press conference held by the State Council Information Office on January 24 that he would lower the deposit reserve ratio by 0.5 percentage points on February 5 to provide 1 trillion yuan of long-term liquidity to the market.
According to experts, the RRR cut will help support a good start for the economy in the first quarter. Against the backdrop of still uncertainties in the internal and external environment, the central bank chose to cut the reserve requirement ratio by 0.5 percentage points at the beginning of the year, releasing about 1 trillion yuan in medium- and long-term liquidity, reflecting that monetary policy continues to make counter-cyclical adjustments and consolidate the economic recovery. tone, giving the market "reassurance".
Pang Ming, chief economist and director of research at Jones Lang LaSalle Greater China, said the RRR cut has stabilized market expectations for the full-year growth target. The average economic growth rate in the past two years has been about 4%. Market institutions generally predict that to achieve the GDP growth target of about 5% in 2024, policies will need to be stepped up. The reduction in the statutory deposit reserve ratio doubled from 0.25 percentage points to 0.5 percentage points, reflecting the increased support of monetary policy, effectively maintaining reasonable and sufficient liquidity in the banking system, enhancing the ability of financial institutions to serve the real economy, and better tapping the Domestic demand stimulates market vitality.
"Reducing the reserve requirement ratio will help to achieve a good 'combination punch' and reflect the consistency of macro policy orientation." Pang Ming further said that the Central Economic Work Conference emphasized the need to enhance the consistency of macro policy orientation, strengthen policy coordination, and ensure that efforts are made in the same direction and the formation of Together. Previously, the Ministry of Finance issued an additional 1 trillion yuan of treasury bonds, and most of the physical amount will be reflected in 2024. The central bank also added a 500 billion yuan mortgage supplementary loan (PSL) quota to support affordable housing and public infrastructure for both emergency and emergency use. Facilities construction, urban village renovation, and existing policies will continue to reflect the economic driving effect. This RRR cut is also a reflection of the consistency of macro policy orientation and is expected to form a synergy with previous policies to further promote economic recovery. Recently, the Ministry of Finance has also stated that it will continue to arrange a certain scale of special bonds for local governments, appropriately increase the scale of investment within the central budget, and give full play to the amplification effect of government investment. The timely reduction of the central bank's reserve requirement can also create a favorable environment for the subsequent series of policies to stabilize demand and stabilize growth. Suitable liquidity environment.
Dong Ximiao, chief researcher of China Merchants Union, believes that a large RRR cut at the beginning of the year, especially before the Spring Festival, will not only inject more long-term funds into the market, but also reduce bank capital costs, guide banks to increase credit and continue to reduce fees to the real economy. Give profit. "As a traditional heavyweight monetary policy tool, the RRR cut has strong signaling significance and is conducive to enhancing social confidence and confidence. Moreover, the RRR cut reflects the strengthening of the policy, and 'real money' encourages financial institutions to increase their investment in entities. Capital investment will help the domestic economic fundamentals continue to improve and fundamentally boost market confidence."
According to market analysts, this RRR cut will help ensure reasonable and sufficient liquidity. Recently, many factors have affected market liquidity: First, government debt issuance and payment. In the fourth quarter of last year, an additional 1 trillion yuan of government bonds and local refinancing special bonds were issued. At the end of the year, fiscal treasury funds increased by more than 200 billion yuan unseasonably compared with the end of the third quarter. Second, new deposits must be paid. In the fourth quarter of last year, new deposits were 3 trillion yuan, and more than 3 trillion yuan will be added in January of previous years. Based on the statutory deposit reserve ratio of 7%, the scale of required deposits is estimated to be 400 billion yuan. above. The third is the demand for cash withdrawals before the holidays. Judging from the situation over the years, the scale may exceed 2 trillion yuan. Since 2020, the People's Bank of China has arranged to reduce the reserve requirement ratio before the Spring Festival every year, which can not only make up for the liquidity gap in the banking system, but also use the cash withdrawn after the holiday to continue to support bank credit extension, achieving the effect of "killing two birds with one stone".
In addition, sufficient liquidity supply will help stabilize money market interest rates. Pang Ming said that under normal circumstances, more credit is extended and liquidity is consumed quickly, which can easily lead to a tightening of funding and raise the overall market interest rate level. This RRR cut by the central bank ensures reasonable and sufficient liquidity before and after the Spring Festival. It is expected to effectively maintain the smooth operation of money market interest rates and stabilize bank liability-side costs. In addition, the reduction of re-loan and rediscount interest rates to support agriculture and small businesses and the market-oriented reform of deposit interest rates These measures will create more room for cost reduction in the real economy.
Our reporter Ma Chunyang