What does the central bank mean by comprehensively lowering RRR? On February 6th, 65438, in order to support the development of the real economy, the People's Bank of China decided to reduce the deposit reserve ratio of financial institutions by 0.5 percentage points on February 6th, 20021kloc-0/5. What does the central bank mean by comprehensively lowering RRR?
What does it mean for the central bank to comprehensively reduce RRR? 1 The so-called "RRR reduction" means "reducing the deposit reserve ratio". The statutory deposit reserve ratio refers to the ratio of the statutory reserve required by the central bank of a country for commercial banks and deposit financial institutions to the total deposits; Lowering the deposit reserve ratio can increase the amount that banks can lend and enable them to supply more funds to the market.
What does double drop mean?
Double decline means that the People's Bank of China reduces the deposit reserve ratio and deposit interest; The purpose of reducing the deposit reserve ratio is the same as that of reducing deposit interest, both of which are to reduce market liquidity, generally to prevent the economy from overheating; When the economy develops too fast or the CPI is relatively high, the deposit reserve ratio and deposit interest rate will generally be raised.
China People's Bank is a bank that manages banks, which is different from the banks we usually see in cities. China Bank is a commercial industry that conducts financial activities for companies or individuals. The People's Bank of China is also called the Central Bank of China, which specializes in the management of commercial banks such as Bank of China, Industrial and Commercial Bank of China and China Construction Bank.
We often see the Ministry of Commerce of China on TV or online, and publish economic indicators such as GDP growth rate and CPI growth rate every month. These economic indicators are the key factors to measure whether the speed of economic development is reasonable, and these factors are also the important basis for China's central bank to reduce the deposit reserve ratio and deposit interest, or increase the deposit reserve ratio and deposit interest.
When GDP growth rate is too fast and CPI growth rate is too high, Chinese banks will generally consider raising the deposit reserve ratio or deposit interest. If the deposit interest rate is high, funds will be willing to deposit their money in the bank, but their willingness to invest will be reduced. This will curb the excessive economic growth, slow down the economic growth rate, and naturally slow down the price (CPI) growth rate.
The deposit reserve ratio means that ordinary people deposit their money in commercial banks. Commercial banks can't use all their money for loans, but they will deposit some money in the central bank. The proportion of this part deposited in the central bank is called the deposit reserve ratio, which is set by the central bank and is generally between 8-22%. The central bank will make adjustments according to the national economic development.
Deposit interest is the interest that ordinary people get when they deposit their money in commercial banks. The level of interest is also stipulated by the Bank of China. Of course, the Bank of China will not require all commercial banks to have the same interest level, but it must be within the scope stipulated by the central bank, and all commercial banks can make adjustments according to their own conditions. This is why people sometimes think that the interest of commercial banks is high or low.
What does it mean for the central bank to comprehensively reduce RRR? On February 6th, 265438, the People's Bank of China decided to reduce the deposit reserve ratio of financial institutions by 0.5 percentage points on February 6th, 200211May (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 8.4%.
According to the central bank, this RRR cut is a comprehensive RRR cut. Except for some county-level corporate financial institutions that implement the 5% deposit reserve ratio, the deposit reserve ratio of other financial institutions is generally lowered by 0.5 percentage points. At the same time, considering that most financial institutions participating in the assessment of targeted cuts to required reserve ratios in inclusive finance have reached the assessment standard of supporting agriculture and supporting small businesses (including individual industrial and commercial households), the policy objectives have been achieved, and relevant financial institutions have uniformly implemented the most favorable deposit reserve ratio, so the RRR cut will release long-term funds.
Why did you cut RRR?
Li Yong, chief analyst of fixed income in soochow securities, said that, first of all, the RRR cut will help China achieve a "soft landing". "The real GDP in the third quarter of 2002/KLOC-0 was 4.9% year-on-year. Since 1992, except for the special time of the epidemic in 2020, the real GDP fell below 5% for the first time. With the increasing pressure of steady growth, it is timely to achieve an economic' soft landing' by reducing RRR. " He said. Secondly, RRR interest rate cuts can also reduce the financing cost of the real economy.
Li Chao, chief economist of Zheshang Securities (60 1878), also said that under the increasing downward pressure on the economy, the primary goal of monetary policy is to switch to steady growth, and it is just the right time to deal with the downward pressure on economic growth by reducing RRR, which is also very important for making cross-cycle adjustments, maintaining overall economic stability and enhancing economic development resilience. In addition, the current weighted interest rate of general loans still needs to be further guided downward. RRR reduction and replacement of MLF can also help commercial banks reduce the cost of capital, which is conducive to transmission to the asset side and reduce the comprehensive financing cost for the entity sector.
The macro team of Dongfang Jincheng International Credit Appraisal Co., Ltd. also believes that the RRR cut at this time is mainly to alleviate the pressure of economic growth, especially the pressure of weak demand, real estate investment and sales decline. In addition, they also pointed out that the "scissors difference" between the current industrial producer price index (PPI) and the consumer price index (CPI) is still at a historical high, and the operational difficulties of small and micro enterprises in the middle and lower reaches continue to intensify. RRR interest rate cuts can release stable and interest-free long-term funds to the banking system, which can not only increase the credit supply capacity of banks, but also directly reduce the capital cost of banks, and promote banks to control the comprehensive financing cost in the process of providing credit to the real economy, especially small and micro enterprises, and then
Reducing RRR does not mean that monetary policy is loose.
It is worth mentioning that the RRR cut does not mean that monetary policy is loose. Regarding the RRR cut, the People's Bank of China made it clear that it will continue to implement a prudent monetary policy, stick to the principle of keeping the word steady, avoid flooding, take into account internal and external balance, maintain reasonable and abundant liquidity, keep the growth rate of money supply and social financing basically match the nominal economic growth rate, strengthen cross-cycle adjustment, coordinate macro-policy convergence this year and next, support small and medium-sized enterprises, green development and technological innovation, and create a suitable monetary and financial environment for high-quality development and supply-side structural reform.
Wen Bin, chief researcher of Minsheng Bank, also pointed out that RRR cut should not be interpreted as the performance of loose monetary policy, and the central bank's monetary policy will remain stable after RRR cut. The central bank will also make better use of structural monetary policy tools to guide financial institutions to further increase their support for small and micro enterprises, green finance, technological innovation, rural revitalization and other key areas and weak links.
Tao Chuan, chief macro analyst of soochow securities, believes that the first half of 2022 is likely to be the main window period for domestic monetary policy easing. If the Federal Reserve starts to raise interest rates due to inflation in the second half of the year, the Bank of China will be further relaxed, especially the room for interest rate cuts will be very limited.
What does it mean for the central bank to comprehensively reduce RRR? On Monday, the People's Bank of China announced that the deposit reserve ratio of financial institutions would be lowered by 0.5 percentage point in June 5438+February 65438+May (except for financial institutions that have implemented the 5% deposit reserve ratio), releasing long-term funds of about 1.2 trillion yuan to better support the real economy.
The central bank said that the RRR cut is a routine operation of monetary policy and will not change the prudent monetary policy orientation. Part of the released funds will be used by financial institutions to repay the medium-term loan facility (MLF) due, and part will be used by financial institutions to supplement long-term funds to better meet the needs of market participants.
"The People's Bank of China adheres to the normal monetary policy, maintains the continuity, stability and sustainability of the policy, does not engage in flood irrigation, and creates a suitable monetary and financial environment for high-quality development and supply-side structural reform." The central bank said.
This is RRR's second comprehensive interest rate cut this year. In July, the central bank lowered the deposit reserve ratio of financial institutions by 0.5 percentage points, releasing long-term funds of about 1 trillion yuan. The central bank said that after lowering the deposit reserve ratio, the weighted average deposit reserve ratio of financial institutions was 8.4%.
The central bank predicts that this RRR cut for one year can reduce the capital cost of financial institutions by about 654.38+0.5 billion yuan, and the transmission of financial institutions can promote the reduction of social comprehensive financing costs.