The People's Bank of China decided to reduce the deposit reserve ratio of financial institutions by 0.5 percentage points on July 6, 20021year (except for financial institutions that have implemented the deposit reserve ratio of 5%). After this reduction, the weighted average deposit reserve ratio of financial institutions is 8.9%.
This RRR cut is a comprehensive RRR cut. Except for some county-level corporate financial institutions that have implemented the 5% deposit reserve ratio, the deposit reserve ratio of other financial institutions is generally lowered by 0.5 percentage points, and the long-term funds released by RRR this time are about 1 trillion yuan.
How will RRR cuts affect our money?
1. The loan interest rate drops.
The decline in bank loan interest rates will reduce the loan interest of many people. For example, the interest rate drops, the mortgage linked with interest rate drops, and the monthly repayment amount decreases, which can squeeze out more funds for consumption. Because interest rate cuts and RRR cuts are loose policies, they will release liquidity and generally bring inflation and price increases.
Most bank deposit interest rates remain unchanged.
The RRR cut has no direct impact on the bank deposit interest rate, and most banks will remain unchanged. However, due to the RRR cut, banks pay less deposit reserve, and more funds can be used, which means that funds are loose. Although the benchmark deposit interest rate remains unchanged, banks may lower the interest rate fluctuation range if they are not short of money.
3. The interest rate of national debt remains unchanged.
The interest rate of government bonds is generally closely related to the interest rate of deposits. After each interest rate cut, the interest rate of the new round of national debt will drop, but the lowered standard has no effect on the national debt, and the interest rate remains unchanged.
4. the interest rate of 4.CDs is not affected.
Like national debt, large deposit certificates have interest rates linked to deposit rates. For example, the interest rate of time deposits of state-owned banks and national joint-stock banks is generally 2.75% higher than the benchmark interest rate, while that of certificates of deposit is 40-52% higher than the benchmark interest rate. The interest rates of time deposits of city commercial banks and rural commercial banks are in the range of 3-4%, and large deposit certificates generally rise by 55%, reaching 4.2625%.
At present, the deposit interest rate is generally 40% higher than the benchmark interest rate. High starting point and low interest rate have long been questioned. If the interest rate is lowered again, it will become less attractive to investors. After the RRR cut, the interest rate of certificates of deposit is not expected to be affected.
5. The bank's financial yield is reduced.
RRR's interest rate cut will have an important impact on the configurable assets of bank wealth management, leading to a decrease in the investable assets of wealth management and a decrease in the rate of return on assets, which in turn will force the rate of return on bank wealth management to decline. Judging from the experience of the past two RRR cuts, three months after the RRR cut, the bank's wealth management yield will drop significantly, with an average annual decline of about 1%.
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The interest rate cut is to reduce the loan interest rate of banks, without increasing the amount of market funds, but it can change the investment of funds. Its main purpose is to encourage the investment behavior of enterprises, but it does not necessarily mean that the currency circulation will increase. Interest rate cuts have two main functions:
1. By reducing the withdrawal of deposits from the central bank, money can enter the market outside the bank and increase the trading activity;
2. It can reduce the loan cost and improve the competitiveness of products. So to put it simply, RRR cuts interest rates to make money circulate, and cuts interest rates to encourage investment.