After China's interest rate marketization reform, interest rate adjustment is no longer the benchmark interest rate for deposits and loans, but the policy interest rate of the central bank. 1 year MLF interest rate and 7-day reverse repo rate are the most important policy interest rates, and their adjustment has the significance of wind vane and will have an impact on various prices in the market. This rate cut is another rate cut after the policy interest rate was lowered in June 5438+ 10 this year.
It is worth noting that this MLF is a continuation of shrinkage, which is within market expectations. However, MLF and reverse repurchase rate cuts exceeded market expectations. So why cut interest rates at this time, and what impact will it have on the market?
At present, the data is weak, and MLF cuts interest rates at one stroke and makes a reasonable combination. MLF table contraction can improve the short-term interest rate level and avoid being divorced from reality; After the MFL interest rate is lowered, the long-term LPR interest rate will fall, which will help stimulate demand. Ming Ming, chief economist of CITIC Securities, said.
Two purposes of interest rate cuts
At present, China has basically formed a market-oriented interest rate formation and transmission mechanism and a relatively complete market-oriented interest rate system. Liquidity in the banking system is mainly regulated by monetary policy tools, releasing the signal of policy interest rate regulation. With the help of the interest rate corridor, the market benchmark interest rate is guided to run around the policy interest rate, and transmitted to the loan interest rate through the banking system, forming a market-oriented interest rate formation and transmission mechanism, adjusting the supply and demand of funds and resource allocation, and realizing the monetary policy goal.
Among them, the policy interest rate is at the core. Policy interest rates include open market operation (OMO), medium-term lending facility (MLF), standing lending facility (SLF), supplementary mortgage loan (PSL) and excess reserve interest rate. , and have different expiration dates. Among them, 1 year MLF interest rate and 7-day reverse repo rate are the most important policy interest rates, and their adjustment has the significance of weather vane.
In June this year, the winning bid rates of 5438+ 10/MLF and 7-day reverse repurchase were 2.85% and 2. 1 0%, respectively, both down by 10 basis point, and the major monetary policies made efforts to grow steadily ahead of schedule. In August, the interest rates of the two companies fell again 10BP to 2.75% and 2%. The reporter learned that there are two main reasons for the central bank to cut interest rates this time:
First, the downward pressure on the economy has increased, and monetary policy needs to be steadily overweight. Judging from the macro-economic operation, the economic recovery in July was less than expected, and the growth rate of major economic indicators declined from June.
According to the data released by the National Bureau of Statistics in August 15, the added value of industrial enterprises above designated size increased by 3.8% year-on-year in July, which was lower than the market expectation of 4.6%, and the previous value was 3.9%. In July, the total retail sales of social consumer goods increased by 2.7% year-on-year, and the market is expected to increase by 5.3%, with the previous value of 3.1%; From June to July, the investment in fixed assets increased by 5.7%, the market expectation was 6.2%, and the previous value was 6. 1%.
The second is to stimulate the credit demand of the real economy. The monthly fluctuation of new credit this year is very obvious, among which 1, March and May are better than market expectations, but February and April are lower than market expectations. Under the action of 33 measures to stabilize the economic market, the total amount and structure of credit improved in June, and the market is expected to continue this trend in July, but both credit and structure weakened in July.
According to data released by the central bank, RMB loans increased by 679 billion yuan in July, a year-on-year decrease of 404.2 billion yuan. Among them, except for bill financing, other sub-items all grew less, indicating that the impulse of bank bills and the real credit demand of residential departments and enterprise departments are very weak, so we can stimulate the financing demand of the real economy by cutting interest rates.
Zhang Jiqiang, deputy director of Huatai Securities Research Institute, said that the weakening of credit in July was largely due to real estate, and the residential sector continued to reduce leverage. For real estate, Baojiaolou is the core, but stabilizing housing prices is the key. Promoting demand recovery can bring the whole industry back to normal track. At present, the year-on-year decline of real estate sales in second-and third-tier cities is still 30%-50%, which is still a serious drag on stabilizing credit and investment. These factors determine that it is necessary to reduce the LPR for more than 5 years.
This interest rate cut is directly related to the recent slow economic recovery and setbacks in the process of easing credit, indicating that the current monetary policy is still oriented to steady growth, and the domestic structural inflationary pressure and the tightening of overseas central banks have not constituted a substantial obstacle to the domestic central bank's policy of reducing interest rates. Wang Qing, chief macro analyst of Oriental Jincheng, said.
Why is MLF shrinking?
After the reform of LPR quotation in August 20 19, the central bank formed the practice of MLF operation in June 15 (postponed in case of holidays), which provided reference for LPR quotation on the 20th of each month. The data shows that the maturity scale of 16 MLF in August is 600 billion. As the interest rate of funds is significantly lower than the policy interest rate, the market expects that MLF may contract in August to moderately raise the interest rate of funds.
The central bank announced that it would start the 400 billion MLF operation in August 15, which means that the MLF will continue to shrink in August, which means that the central bank will recover liquidity from the market. This broke the previous continuous pattern of the same amount for four consecutive months, which was in line with market expectations.
Since April, with the joint efforts of monetary policy and fiscal policy, market liquidity has always been in an abundant state, which has led to the continuous decline of major market interest rates such as overnight capital interest rate, 7-day capital interest rate and 1 year interbank deposit receipt yield. At the beginning of August, DR00 1 fell to around 1%, and DR007 fell below 1.3%, both reaching the lowest level this year.
Wen Bin, chief economist of Minsheng Bank, said that with abundant liquidity and the money market interest rate deviating from the policy interest rate, the demand of primary dealers for reverse repurchase and MLF operations has declined, and banks can raise funds by issuing interbank certificates of deposit. Moreover, since August, the pattern of asset shortage has continued, the pressure of capital utilization is great, and the demand of bank treasurers for interbank deposit certificates is also low. In this context, the passive contraction of MLF with low cost performance conforms to the market choice.
Wind data shows that the current one-year interbank deposit interest rate of state-owned stock banks is around 1.9%, which is lower than the one-year MLF interest rate of 90BP (before this interest rate cut). Judging from the subjective choice of primary dealers, the current MLF is not cost-effective, and it can be financed by issuing interbank deposit certificates, that is, the central bank is passively shrinking.
In the second quarter monetary policy implementation report, the central bank explained the reasons for the shrinkage of reverse repurchase and the frequent adjustment after July. Obviously, because of sufficient capital supply and reduced demand, the central bank correspondingly reduced the amount of reverse repurchase operations, and the central bank's response was more passive.
According to the reporter of 265438+20th Century Business Herald, since late June, the reverse repurchase operation volume of the central bank has changed frequently within seven days: from June 24 to June 30, the reverse repurchase operation volume rose to tens of billions, mainly to cope with the tight liquidity at the end of the season; From July 1 to July 15, the reverse repurchase volume first decreased to 10 billion, and then further decreased to 3 billion. The main purpose of market analysis is to crack down on arbitrage and reduce the leverage of bond market; 18 In July, the reverse repurchase volume first increased to1200 million, then decreased to 7 billion in July 19, further decreased to 3 billion on July 20 -22, increased to 5 billion on July 25 -26 and then decreased to 2 billion after July 27.
Judging from the market interest rate, in the morning of August 15, DR00 1 hovered around 1%, which was the same as the previous day, but DR007 hovered around 1.44%, which was about 10BP higher than the previous day. The market predicts that with the realization of wide credit, DR007 may gradually return to the 7-day reverse repurchase policy interest rate.
What is the market influence geometry?
1 year MLF interest rate and 7-day reverse repo rate are the most important policy interest rates, and their adjustment is of weathervane significance, which will have an impact on bond market, credit market, exchange rate market and even stock market prices.
In the bond market, after the announcement of the central bank's interest rate cut, the bond market rose significantly. The yield of interest rate bonds among major banks dropped rapidly. The yield of China Development Bank 10 active bonds dropped by 3.25bp, and the yield of government bonds 10 active bonds dropped by 3.3bp. In the bond market, the yield of bonds was inversely proportional to the market value of bonds: the lower the yield, the higher the market value of bonds, and the bullish bond market; On the other hand, it is a bear.
Treasury futures opened sharply higher, with the 10 main contract rising by 0.37%, the 5-year main contract rising by 0.20% and the 2-year main contract rising by 0. 13%. Wen Bin said that under the superposition of factors such as the overall downward movement of the interest rate center, loose liquidity and slow economic recovery, the bond market interest rate is easy to go down, and there is not much room for upward movement, so the overall interest rate will remain low and volatile. In addition, interest rate cuts will help boost the stock market and be good in the short term.
In the credit market, from 2065438 to August 2009, the central bank promoted the market-oriented reform of loan interest rates. After the reform, LPR is quoted by the quoting banks on the 20th of each month (postponed in case of holidays) according to the best customer loan interest rate plus the open market operating interest rate (mainly MLF interest rate). In other words, LPR=MLF interest rate+bonus points.
The recent real estate problem is not only the credit crisis of housing enterprises, but also the demand side has been obviously weakened. After this policy interest rate cut, the 1 year and 5-year LPR may be lowered simultaneously, and the loan interest rate (including mortgage interest rate) will also be lowered.
Some market participants predict that in order to stabilize the real estate market, the decline of LPR in the next five years may be even greater, which will correspondingly drive down the interest rate of residential mortgage. This is a precedent before. After the deposit interest rate dropped in May, the LPR of 1 year was not adjusted, but the LPR of more than 5 years dropped by 1.5 BP. ..
Zhang Jiqiang said that since the reform of the 20 19 LPR quotation mechanism, due to the long-term constraints of the policy of housing, housing and non-speculation, the downward adjustment of LPR for more than five years is relatively small compared with that of 1 year. Up to now, LPR*** has been downgraded five times in five years, with a cumulative RRR reduction of 40BP. /kloc-0 * * 6 times a year, with a cumulative reduction of 55BP. Therefore, the 5-year LPR has a large room for downward adjustment.
Wang Qing believes that with the sharp drop in loan interest rates and the full efforts of structural monetary policy tools and newly established policy financial tools, financial data will rebound significantly in August. This will hedge the recent economic downturn and lay the foundation for the GDP growth rate to return to a reasonable range as soon as possible in the second half of the year.
In terms of exchange rate, the RMB exchange rate may face some depreciation pressure due to the narrowing of the spread between China and the United States. After this interest rate cut, China's 7-day reverse repo rate is 2%, and the US federal target fund target rate is 2.25%-2.5%, which is obviously upside down. After the central bank announced a rate cut in August 15, the RMB exchange rate also weakened.
The "Monetary Policy Implementation Report for the Second Quarter" issued by the central bank in August 10 stated that in the next stage, it is necessary to intensify the implementation of prudent monetary policy, give full play to the dual role of monetary policy tools in aggregate and structure, take the initiative to respond, boost confidence, do a good job of cross-cycle adjustment, give consideration to short-term and long-term, economic growth and price stability, internal balance and external balance, and adhere to the principle of not flooding and not over-issuing money for the real economy.
Wen Bin said that due to the large amount of MLF due in September-65438+February, the subsequent MLF may continue to shrink in the current liquidity environment. In the later period, the pace of the Fed's interest rate hike slowed down. Under the policy tone of taking me as the mainstay, the possibility of cutting interest rates again is not ruled out. The probability of RRR reduction in the third quarter is not high. However, if the real estate financing improves in the fourth quarter and the process of wide credit is accelerated, in order to provide long-term liquidity to the banking system and further reduce the debt cost, it is not excluded to slightly reduce the RRR by 0.25 percentage points in due course.
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