CPI Or &Nbsp Will Go Up Again; Economic Growth Will Slow Down.

Experts pointed out that this monetary policy tool will help to promote the banking industry to accelerate the pformation, recovery of liquidity and reduce risk and many other objectives.

The introduction of the "dynamic adjustment of differential reserves" has attracted the attention of all parties, and its progress is remarkable.

Data is the most important clue: in January, the new RMB loans increased by less than about 350000000000 yuan a year, and M2 increased by 17.2% compared with the same period last year (19.7% in December 2010), creating a new low growth rate since November 2008.

Where does this regulation come from?

Central bankers recently revealed the secret: the central bank has started to make money.

The scope of application is extended to local corporate banks.

The frequent implementation of differential reserve dynamic adjustment is reported after the central economic work conference.

At the end of last year, Hu Xiaolian, deputy governor of the central bank, said in the speech at the internal meeting of the central economic work conference that the next phase would be dynamic adjustment of differential reserves, together with conventional monetary policy tools such as interest rates, deposit reserve ratio and open market operations, with a view to "more targeted recovery of liquidity".

"This measure is based on the level of bank credit growth deviating from the appropriate level of the national economy.

Now the central bank has implemented the differential reserve requirements for more than 40 local financial institutions with low capital adequacy ratio, excessive credit growth and increased risk of Pro cyclical risks.

According to a senior executive of a local commercial bank, the dynamic adjustment of differential deposit reserve ratio implemented by the central bank has expanded from the former national financial institutions to the local corporate banks. The reason is that the implementation effect of the dynamic adjustment of the differential deposit reserve ratio has been recognized by the decision-makers.

More than 20 rural credit cooperatives have been included.

The source said the central bank's branches are responsible for determining the differential reserve ratio of the local corporate banks, which ensures the implementation of the policy.

Since last year, the central bank has raised the deposit reserve ratio of financial institutions for the 8 time. At present, the deposit reserve ratio of large financial institutions has reached a high level of 19.5%, and the room for continued adjustment has been limited.

The dynamic adjustment of differential reserve is to introduce macro prudential requirements in the existing differential reserve system and to standardize and pparently. This is mainly based on the total amount of social financing, the degree of deviation from the main development goals of social credit and the impact of specific financial institutions on the whole deviation, and considers the importance and stability of financial institutions and the implementation of state credit policies.

According to a four state-owned commercial bank, the dynamic adjustment of differential reserves is based on the development and changes of the economic and financial situation. The central bank has taken out its monetary policy toolbox as a selective policy tool or supplementary policy tool in the past, and has introduced new ideas to further enrich the means and tools of macroeconomic regulation and control.

After weight adjustment, the CPI value of January was 4.9%. According to the classification data and historical data comparison, the reason is lower than the average expected value of the previous 5.2%. The main reason is that the growth rate of food products is only 10.3% over the same period, rather than the impact of the weight adjustment itself.

Food prices still have a greater contribution to CPI.

Entering the year February, all kinds of food prices were stable, and the wholesale price index of agricultural products turned to the top. While all kinds of food cycle ratios released by the Ministry of commerce were higher than those of meat, other kinds of prices rose steadily, while the price of feral vegetables before the increase was negative for two consecutive weeks. The overall increase in food prices in February was limited.

Taking into account the increase in food prices in February last month, the growth rate of food products this month is expected to drop to around 9% compared to January, compared with January.

{page_break}

Non food prices are subject to higher upward pressure.

The national development and Reform Commission raised the price of gasoline and diesel at 0:00 in February 20th, up 13.8% and 15.25% compared with the same period last year, an increase of 4.9 and 5.5 percentage points respectively compared with January.

We believe that CPI still faces upward pressure in March.

Although the prices of some kinds of foods tend to fall as the weather improves, food prices are generally the most likely to remain stable compared with February.

In addition, the price of international crude oil and basic metals is rising. China's import inflation pressure has increased sharply, and its non food prices will remain upward.

In March, CPI will go up again, and the possibility of breaking through 5% will be great.

In terms of economic growth, the HSBC PMI preview index, released recently in February, has hit a low of nearly 7 months. This shows that the cumulative effect of continuous tightening monetary policy and severe real estate regulation policy is beginning to show, and China's manufacturing boom has begun to decline.

Due to the small base in 1-2 last year, the industrial added value will continue to rise to 14.5% in 1-2 months in 2011, but it will drop to 12.1% in March.

Because the working days in February are relatively small, and some products are exported in advance in January, the export growth rate in February will decrease considerably. It is expected that the export growth in February will be about 26.1% year-on-year and 25.1% in March.

In terms of money supply, we expect that the M1 growth rate will rebound in February, and it will fall in March. The growth rate of M2 will slow down year by year.

In mid February 2010, the M1 decreased by 530 billion yuan, and the M1 growth rate in February 2011 is expected to rebound considerably.

After the quarterly adjustment, the annulus ratio will be calculated annually, and the M1 growth rate in March will fall to 15%.

The new loan is expected to be about 600 billion yuan -7000 billion in February, down to 500 billion yuan in March and -6000 billion yuan. In the 2 and March, foreign exchange accounted for about 350 billion yuan, and the corresponding 2 and March M2 growth rate will further fall to 17.1% and 16.4% respectively.