Deposit Reserve Rate Increase: Rate Hike Is Expected To Slow Down?

The central bank recently decided to raise the deposit reserve rate again. Analysts believe that the move will delay the rate hike.

From May 10th, the deposit reserve ratio of deposit financial institutions will be increased by 0.5 percentage points, which is the third time the central bank raises the deposit reserve ratio in 4 months. After the increase, the statutory reserve requirement ratio of large financial institutions will reach 17%.

The central bank also said that the deposit reserve ratio of rural credit cooperatives and village banks will not be raised temporarily.

Many analysts said that the central bank once again raised the deposit reserve ratio, tightening liquidity policy intention is obvious. This also highlights the priority of quantitative monetary policy tools, and the central bank is still cautious about raising interest rates.

"This should be seen as a further return of monetary policy to normality. At the moment, the exit of moderately loose monetary policy can not be lightly stated." A state-owned big bank investment bank said.

Designed to tighten liquidity

Analysts pointed out that the increase in the reserve requirement is mainly the recovery of liquidity, and the scale of funds frozen by 0.5 percentage points is about 300 billion yuan.

There is no change in the liquidity adequacy of the banking system. From the perspective of overtaking rate in the first quarter, the overrun rate of financial institutions was 1.96% at the end of 3, which was 0.2 and 1.17 percentage points lower than the end of last month and the end of last year, but still 0.65 percentage points higher than that of last year's lowest in August.

"The limitation of credit limits makes commercial banks not short of money. The 3 year central bank is still issuing at a rate of 1 basis points, and the pressure of bank's capital allocation is obvious. A joint-stock commercial bank told reporters.

In April 22nd, the central bank issued a 90 billion yuan 3 year central bank ticket in the interbank market. The issue volume increased by 75 billion yuan compared with the previous one, but the issue rate dropped from 2.75% of the previous tender to 2.74%.

The large state-owned banks pointed out that due to credit constraints, most commercial banks are facing greater pressure on capital allocation. Because of the higher yield and better liquidity of the 3 year central bank, they are favored by the institutions.

At present, the control of credit is still strict. Data show that the first quarter of new loans 2 trillion and 600 billion yuan, according to the previous regulatory authorities 7 trillion and 500 billion yuan loan increments and quarterly "3:3:2:2" distribution pattern, exceeding the plan of 300 billion yuan.

The responsible person of the regulatory department pointed out last month that we should effectively grasp the pace and speed of credit delivery, strictly control the increments of credit increments and increase the credit increments in the first quarter, and we must firmly press back in the two quarter.

Recently, a series of market control policies have led to a decline in demand for loans. The market expects bank liquidity to remain relatively relaxed.

In addition, the high level of foreign exchange also increased the pressure on the central bank to recover liquidity.

According to the central bank's data, foreign exchange accounted for 749 billion 100 million yuan in the first quarter, and the new amount was 2.1 times that of the same period last year. At the end of 3, the balance of foreign exchange held by PBC increased by 19.27% over the same period last year, and the growth rate was faster than last month.

"If the adjustment of the first two deposit reserve rates is mainly directed at excessive credit growth this year, the adjustment is likely to be a higher level of foreign exchange earnings coming back to about 300 billion yuan due to appreciation expectations." Societe Generale Bank capital operations center senior economist Lu commissar pointed out.

CITIC Securities chief macroeconomic analyst Zhu Jianfang also believes that the current domestic economic overheating situation, hot money influx, raise the deposit reserve ratio will have a greater impact on foreign exchange and external capital inflows, and so is the central bank's need to hedge foreign exchange.

Slow rate hike expectations

The recent increase in the deposit reserve ratio has eased the strong expectation of the central bank's interest rate hike in the recent market.

The above big state-owned people believe that the three consecutive increase in the deposit reserve ratio indicates that the central bank is more inclined to give priority to the use of quantitative monetary policy tools, raising interest rates will be more cautious.

Dong Xianan, chief macroeconomic analyst at Xingye securities, said that since March, price pressures have come back again, but the government will postpone raising interest rates because of falling prices.

A bond analyst at Shenyin Wanguo said: "the central bank is very concerned about asset prices. At present, the regulation of the property market has depressed the formation of asset prices, but there are some risks in the three quarter to the four quarter, and the economy is likely to go down. "

There are also some people who maintain the 1~2 interest rate forecast for the year. A person from the NDRC recently said that the rate hike in the future may be faster than expected.

He said: "at present, liquidity is even more relaxed than people think. In addition to using the central bank's ticket, it may also use the statutory reserve requirement ratio to keep an eye on the bank's overstock rate. If these measures are not effective, they will consider raising interest rates, but in the future, it is more likely to adopt asymmetric interest rate increases, such as targeting interest rates on real estate, abolishing all preferential policies and increasing punitive interest rates.

In addition, many people think that the deposit reserve ratio is still up. The above-mentioned big state-owned people noticed that after the rise, the deposit reserve ratio of large financial institutions was 0.5 percentage points from the high point in 2008, and the deposit reserve ratio even exceeded 20% from a longer time.