On August 15, the People’s Bank of China launched204 billion yuan reverse repurchase operation in the open marketand401 billion yuan medium-term loan facility (MLF) operation, in whichThe winning bid rate for reverse repurchase is 1.80%.、The winning bid rate of MLF is 2.50%., down 10 basis points and 15 basis points respectively from July.
Wind data shows that the MLF maturity on the 15th was 400 billion yuan, which means that the MLF achieved a net investment of 1 billion yuan this month, which was the ninth consecutive month. At the same time, 6 billion yuan of reverse repurchase expired on that day, which means that the net amount of reverse repurchase reached 199 billion yuan.
People in the industry generally believe that due to the influence of the People’s Bank of China’s downward adjustment of policy interest rate, considering that LPR is composed of "MLF operating interest rate+plus points",LPR will go down with high probability this month..
Why "cut interest rates"?
From the price point of view, Dong Ximiao, the chief researcher of Zhaolian Finance, believes that in view of the monthly fluctuation of social financing and financial statistics in July, it is necessary and urgent to moderately reduce the interest rates of various policy instruments and guide LPR to continue to decline.
Wang Qing, chief macro analyst of Oriental Jincheng, pointed out that there are three main reasons for this interest rate cut:firstSince July, exports have continued to experience double-digit negative growth, and consumption and investment as a whole have continued to run weakly, so it is necessary to continue to strengthen the policy of steady growth.nextRecently, the price level is low, which provides a large space for monetary policy to increase counter-cyclical adjustment.finallyAt present, the Fed’s interest rate hike has come to an end, and the pressure of RMB depreciation has decreased in the second half of the year. At the same time, the toolbox of exchange rate stabilization policy is rich, and the People’s Bank of China will take timely measures when necessary. Therefore, the RMB exchange rate factor will not constrain domestic monetary policy in the second half of the year.
It is worth noting that the MLF interest rate, which is the medium-term policy interest rate, has been lowered by 15 percentage points, while the short-term policy interest rate, the 7-day reverse repo rate, has dropped by 10 percentage points.For asymmetric adjustment.
In this regard, Zhou Maohua, a macro researcher in the financial market department of China Everbright Bank, believes that MLF is the anchor of the medium-term financing cost of financial institutions and has a greater impact on the financing cost of the real economy, while the 7-day interest rate of reverse repurchase represents the short-term market financing cost. In this asymmetric interest rate cut, the MLF interest rate has been lowered even more.on the one handIt shows that the current policy focuses on guiding the downward financing cost of the real economy.on the one handIt helps to curb the idling arbitrage of funds in the money market.
Earlier, Zou Lan, director of the Monetary Policy Department of the People’s Bank of China, publicly stated that the People’s Bank of China would scientifically and reasonably grasp the interest rate level. According to the economic and financial situation and the needs of macro-control, counter-cyclical adjustment should be done in a timely and appropriate manner, and the balance between growth and risk, internal and external should be taken into account to prevent arbitrage and idling of funds, improve the efficiency of policy transmission and enhance the stability of bank operations.
In terms of quantity, Wen Bin, chief economist of China Minsheng Bank, pointed out that this month, the MLF increased slightly and the 7-day reverse repurchase increased significantly, which was mainly used to hedge the impact of the short-term tax period peak. However, because the overall funding continues to be loose, the interest rate of funds is lower than that of the policy interest rate center, the market leverage ratio is high, and the demand for MLF continuation by banks is reduced, so it is not necessary to continue MLF in a large amount.
What’s the impact?
From the perspective of stabilizing the real economy, Wen Bin pointed out that the current profitability of enterprises is declining, the turning point of medium and long-term loans of enterprises is approaching, the credit of residents is shrinking as a whole, and the pressure on government debt service is increasing. Reducing costs, expanding investment and promoting consumption are still important tasks. To this end, by cutting interest rates, interest rates in the money market and bond market, especially in the medium and long-term credit market, can be driven down, which will further contribute to the further decline of financing costs in the real economy.Create a good monetary and financial environment for the subsequent steady recovery of the domestic economy.
Industry analysts generally believe that after MLF’s winning bid rate is lowered,Subsequent LPR will also follow up and adjust.Among them, the downward adjustment of LPR over 5 years may be even greater.
Dong Ximiao said that after MLF’s bid-winning interest rate fell, banks continued to reduce deposit interest rates and reduce debt costs this year, and there was some room for banks to reduce their points. Therefore, LPR is more likely to fall this month.
Considering the current operating state of the property market, Wang Qing judged that it is more likely that the LPR will be lowered by a larger margin over five years in August. This will drive the interest rate of newly issued residential mortgages to decline rapidly, release a clearer signal of stabilizing the property market, and reverse market expectations.
It is worth noting that with the interest rate cut,The yield of major inter-bank interest rate bonds fell sharply after the opening on the 15th.Among them, the yield of 10-year treasury bonds even fell below the 2.6% mark, with a minimum of 2.554%, the lowest in recent years.
Wang Qing pointed out that according to the market-oriented adjustment mechanism of deposit interest rate, the deposit interest rate will be adjusted reasonably with reference to the bond market interest rate represented by the yield of 10-year treasury bonds and the loan market interest rate represented by the one-year LPR. This means that if the 1-year LPR is lowered in August and the yield of 10-year government bonds continues to decline,A new round of deposit interest rate reduction process may start.This will ease the downward pressure on the bank’s net interest margin.
Reporter Xu Yupeng
Editor Li Mengxi
Intern Li Haochen
Source: China Bank Insurance.