Zong Liang, chief researcher of the Bank of China, told the Securities Daily that the Federal Reserve has cut interest rates three times this year, providing a larger space for domestic monetary policy, which is relatively flexible. Chinas monetary policy first considers the domestic environment, but it will also take into account the United States. Changes in interest rates may affect capital flows, so the central bank is more cautious. At present, the central banks policy is to take a balanced measure by integrating internal and external factors.
Wu Ge, chief economist of Changjiang Securities, told Securities Daily that the central banks monetary policy mainly depends on domestic factors, while foreign factors are not dominant. He believes that at present, domestic monetary policy will remain stable and neutral.
In addition, the positive inflation data of the US in October further deepens the markets expectation of the Feds inaction on the December resolution, and the Feds loose monetary policy may enter a pause stage.
Zong Liang also believes that the Federal Reserve has cut interest rates three times. In the future, the probability of maintaining stability is relatively large, which should leave some space for the next policy. Whether the Federal Reserve will continue to cut interest rates in the future depends on the economic growth of the United States in the fourth quarter of this year and the first quarter of next year. If the inflation rate of the United States is more than 2%, the Federal Reserve may maintain a relatively stable situation, but if the inflation rate is less than 2%, the Federal Reserve may still cut interest rates.
On November 14, the central bank continued to suspend reverse repo, which is 14 consecutive working days since the end of October. Zong Liang believes that the suspension of reverse repo for 14 consecutive working days shows that the central bank is more cognizant of the current market situation, there is no liquidity shortage, and the liquidity is more reasonable.
Last week, the central bank unexpectedly cut the operating interest rate by 5bp when it renewed MLF. According to the market, this shows that the central banks monetary policy does not change fundamentally due to the rising structural prices, and the money markets fund side is expected to remain stable. Although the central banks open market continues to suspend capital investment, the overall fund side remains loose.
LPR is largely based on MLF. The adjustment of MLF interest rate can be considered as the adjustment of overall interest rate. It doesnt seem that sensitive, but it actually lowers interest rates in the real economy. Zongliang said.
Source: responsible editor of Securities Daily: Yang qian_nf4425