Deputy governor of the central bank: the next MLF interest rate and LPR will be more likely to go down

category:Finance
 Deputy governor of the central bank: the next MLF interest rate and LPR will be more likely to go down


Pan Gongsheng:

First of all, as you can see, on January 1 this year, we announced a 0.5 percentage point reduction in the reserve requirement ratio, which was the release of 800 billion long-term funds. After the opening of the Spring Festival, on February 3 and 4, the peoples Bank of China has carried out a total of 1.7 trillion open market repo operations and put funds into the market. It should be said that these measures fully demonstrate the determination of the central bank to stabilize market expectations and boost market confidence. From the perspective of current market operation, the bid winning rates of 7 and 14 days in the open market are 10 basis points lower than that of the previous period, which are 2.4 and 2.55 respectively. In the context of volume increase and price decrease, the interest rate of the whole financial market is also declining. On February 6, the inter-bank markets inter-bank repo rate and 7-day repo rate were about 1.8 and 2.3 respectively, so it should be said that the trend was very stable.

As you know, LPR is the quotation rate of the loan market, which is the optimal quotation rate of the loan. It is formed by the quotation of 18 quotation lines. The overall interest rate change in the market will be reflected in the loan interest rate. Changes in interest rates in the financial market and the money market will affect LPR expectations. Now the market expects that the winning interest rate of the next medium-term lending convenience operation and the LPR announced on February 20 will also have a greater probability of going down. LPR adjustment has a strong influence on the loan pricing of commercial banks, and has a strong guidance and direction. Because the bank loan interest rate is formed on the basis of LPR, the bank adjusts the range of increase and decrease points according to the change of the overall market interest rate when granting loans.

As for the next step, according to the requirements of the State Council, the peoples Bank of China is also carefully analyzing and assessing the impact of the epidemic on Chinas economy. Chinas macro-control policy space is still sufficient. Among the major economies in the world, Chinas monetary policy is still a small number of countries that implement normalized monetary policy. Therefore, our toolbox is very sufficient. In terms of monetary policy, the next step is to increase the intensity of counter cyclical regulation, maintain reasonable and sufficient liquidity, and provide a good monetary and financial environment for the real economy. Second, we need to further deepen the reform of interest rate liberalization and improve the transmission mechanism of market quotation interest rate, which is the LPR transmission mechanism I just mentioned, so as to improve the transmission efficiency of monetary policy and reduce the cost of social financing. Third, we will continue to play the role of structural monetary policy instruments, such as targeted reduction of standards, refinancing and rediscount, and increase support for key areas and weak links in the national economy. Thank you. Source: CFA editor in charge: Chen Hequn, nb12679

In terms of monetary policy, the next step is to increase the intensity of counter cyclical regulation, maintain reasonable and sufficient liquidity, and provide a good monetary and financial environment for the real economy. Second, we need to further deepen the reform of interest rate liberalization and improve the transmission mechanism of market quotation interest rate, which is the LPR transmission mechanism I just mentioned, so as to improve the transmission efficiency of monetary policy and reduce the cost of social financing. Third, we will continue to play the role of structural monetary policy instruments, such as targeted reduction of standards, refinancing and rediscount, and increase support for key areas and weak links in the national economy. Thank you.