It is almost impossible to reduce the reserve requirement in an all-round way in the year of increasing the price stability and quantity of money supply

category:Finance
 It is almost impossible to reduce the reserve requirement in an all-round way in the year of increasing the price stability and quantity of money supply


Since November, the central bank has frequently put money into the open market: data from wind database show that in the 15 working days of the first three weeks of this month, the central bank has carried out reverse repurchase operations in 12 of them, with an accumulated amount of 1170 billion yuan, and the maturity funds of reverse repurchase in the same period are 1380 billion yuan, and the net withdrawal is 210 billion yuan.

At the same time, on November 16, the central bank launched a one-year MLF operation of 800 billion yuan, setting a new high in the scale of single day MLF. In November, the maturity of MLF was 600 billion yuan, and the scale of medium and long-term funds released was 200 billion yuan.

Wang Qing, chief Macro Analyst of Dongfang Jincheng, analyzed in an interview with the times weekly that the current economic growth of China is better than expected, which means that there is no need to reduce the policy interest rate in the short term. Specifically, in terms of maintaining currency liquidity, the central bank will give priority to MLF operation and periodically inject medium and long-term liquidity into the banking system, which means that the possibility of reducing the reserve ratio by the end of the year is almost zero. Given that the possibility of policy interest rate adjustment in the next few months is also very small, monetary policy will continue to be in the observation period for some time to come.

However, in December, the liquidity pressure at the end of the year will be further highlighted. The market is generally expected to increase the frequency of the central banks open market operations.

In the remaining four days of this week, there will be 50 billion yuan, 100 billion yuan, 70 billion yuan and 80 billion yuan of reverse repurchase maturing in the open market, accumulating 300 billion yuan.

Stability is the first word

Since the second half of 2020, monetary policy has gradually changed from broad to stable. In terms of liquidity protection, the central bank has strengthened the use of reverse repurchase + MLF policy portfolio operation, starting from short-term and medium-term funds, rather than releasing long-term funds by reducing reserve requirements.

In terms of MLF, since August, the central bank has been overdue for four consecutive months, with incremental funds of 150 billion yuan, 400 billion yuan, 300 billion yuan and 200 billion yuan respectively, and the operating interest rate remains unchanged.

MLF has been over extended for four consecutive months, which means that the central bank intends to control the upward momentum of medium-term market interest rate represented by interbank deposit certificate interest rate, so as to avoid excessive medium and long-term liquidity tension. According to Wang Qings analysis of the times weekly, since the regulatory authorities required the reduction of structural deposits in June, as an alternative, the issuance of interbank certificates of deposit has increased both in volume and price. In October, the average issuance rate of one-year joint-stock interbank certificates of deposit reached 3.15%, 13 basis points higher than that in September. In November, the index continued to rise. On November 19, the issuance rate of one-year joint-stock interbank certificates of deposit rose to 3.29%, a new high in the year, and was significantly higher than the one-year MLF operating rate. This shows that MLF has become an alternative source of funds while the task of reducing structural deposits remains heavy in the fourth quarter.

The chief economist of Founder Securities believes that since the current MLF operating rate is lower than the market interest rate, the central banks large-scale development of MLF is conducive to banks appropriate reduction of debt costs. Therefore, as long as the central bank releases sufficient liquidity, the cost of bank debt will be relatively controllable. In the future, it will still promote the real economy of financial yield, and the bank profit may show a slow growth.

On the other hand, this year, the target of 1.5 trillion yuan in interest of financial institutions can be achieved on time, which also makes the policy lack of motivation to further increase the weight.

According to the data released by the central bank, by the end of September 2020, the balance of inclusive small and micro loans increased by 29.6% year-on-year, reaching a record high since statistics for seven consecutive months; from January to September 2020, inclusive small and micro loans increased by 3 trillion yuan, an increase of 1.2 trillion yuan year-on-year; in September, the average interest rate of new inclusive small and micro loans was 4.92%, down 0.96 percentage points compared with December last year; at the end of September, inclusive small and micro loans supported small and micro businesses 31.28 million business entities, with a year-on-year increase of 21.8%.

Earlier, sun Guofeng, director of the Monetary Policy Department of the central bank, said at the central bank briefing that the data showed that the financing of small and micro enterprises and private enterprises continued to show the characteristics of increasing in volume, expanding in scope and decreasing in price, and the financing demand was increasing, indicating that the current loan interest rate level is appropriate.

It is almost impossible to reduce the reserve reserve requirement in a comprehensive way within the year

From the above Central Banks operation and position, the central bank intends to maintain the stability of monetary policy and guarantee the short, medium and long-term capital demand of the market.

On November 18, Zhou Chengjun, director of the Financial Research Institute of the central bank, said publicly that, overall, Chinas current market interest rate level is lower than the natural interest rate equilibrium level. This will lead to a certain degree of distortion, leading to the allocation of resources to some inefficient areas, thus resulting in a certain degree of moral hazard. From this point of view, he personally thinks that there is not much room to reduce interest rates now, and the central banks keeping monetary policy normalized has a certain degree of theoretical support.

The color of the times weekly reporter analysis that the recent rise in long-term interest rates, the main incentive lies in the default of credit bonds. With the introduction of policy measures and the calming down of the impact of the event, the long-term interest rate will still fall, but the space for decline is relatively limited. The yield of active 10-year Treasury bonds may fall from the recent high of 3.35% to the level of 3.1% - 3.2%.

From the end of each year to the eve of the Spring Festival, liquidity pressure is the biggest time of the year. The regional head of one of the four state-owned banks in the Pearl River Delta told the times weekly that the central bank would take care of liquidity at the end of the year to make it at a reasonable level because of the tax period superimposed on the year-end assessment of banks, the payment of enterprises at the end of the year and the consumer demand of residents. However, this year, there was a default on credit bonds, and the long-term interest rate of the market was high. The central bank raised the interest rate, worried about capital idling, and there was no room to reduce the interest rate. The person in charge expected that from December to the Spring Festival of next year, the central bank will continue to increase the amount of MLF and continue to supplement liquidity through reverse repurchase. At least until the first half of next year, I dont think there will be any policy operations such as policy interest rate adjustment and comprehensive RRR reduction, but the possibility of targeted RRR reduction will not be ruled out. The operation of monetary policy is still based on stability, and the normalization of monetary policy also needs a gradual process. Color to the times weekly reporter forecast, credit and liquidity appear marginal tightening, the earliest will also be after the end of the first quarter of 2021. Source: time weekly editor: Yang Bin_ NF4368

From the end of each year to the eve of the Spring Festival, liquidity pressure is the biggest time of the year. The regional head of one of the four state-owned banks in the Pearl River Delta told the times weekly that the central bank would take care of liquidity at the end of the year to make it at a reasonable level because of the tax period superimposed on the year-end assessment of banks, the payment of enterprises at the end of the year and the consumer demand of residents. However, this year, there was a default on credit bonds, and the long-term interest rate of the market was high. The central bank raised the interest rate, worried about capital idling, and there was no room to reduce the interest rate.

The person in charge expected that from December to the Spring Festival of next year, the central bank will continue to increase the amount of MLF and continue to supplement liquidity through reverse repurchase. At least until the first half of next year, I dont think there will be any policy operations such as policy interest rate adjustment and comprehensive RRR reduction, but the possibility of targeted RRR reduction will not be ruled out. The operation of monetary policy is still based on stability, and the normalization of monetary policy also needs a gradual process. Color to the times weekly reporter forecast, credit and liquidity appear marginal tightening, the earliest will also be after the end of the first quarter of 2021.