Monetary Policy: The Mother Of The Central Authorities Broke The Water.

In the past, in the era of saving money, the way for the central authorities to release water was very smooth. Loans were issued through deposits to stimulate economic recovery.

However, in the era of financial management, there was no deposit in the central bank after the water was released. New money was added to it, and only 1/3 flows to non-standard loans or loans. The rest of the 2/3 flows to the capital market. The difference between the stock market and the loan is that the former is divided into one level and two tier markets, and the latter is directly into the economy.

Therefore, in the mode of financial management, whether the central bank's discharge can be effective depends on the face of the primary market. If the issuance of stocks and bonds in the primary market is restrained, the stock market and bond market of the two tier market will have a bubble. This is also the fundamental reason for the stock market boom after the 14 year's release.

After the interest rate cut, the central authorities found that there were no targets for steady growth, anti deflation and so on. Only the stock market was skyrocketing, so it was also terrified. After two months, they did not dare to speak. Even the governor of the central bank reminded everyone to speculate on fundamentals in foreign countries. Even if the central bank restarted the reverse repurchase during the Spring Festival period, the central mom was also making a lot of mistakes, and the interest rate of the 28 day reverse repurchase rate was 4.8%.

So in our view, the current Mama's

It is hard to guess that unlike the 14 years of innovative water release from the beginning to the end of the year, the monetary policy of the central Mama has been elusive since 15 years ago. It is likely that the current release of water is more effective on the capital market. Therefore, it is urgent to liberalise the stock and bond financing so that the capital market can flourish and feed back to the economy in time. Otherwise, if we increase the intensity of releasing water in the financing liberalization, we will only lead to a bigger financial bubble and increase the potential financial risks in the future.

But from the perspective of the basic responsibilities of China's mom, it is not just about financial stability. Growth, inflation and employment are all important considerations.

From these angles, we can find that the pressure of water release from mama is pretty big.

First look at growth, 14 years.

The growth rate dropped to 7.4%, the lowest value in the past 24 years, while the current benchmark lending rate is 5.6%, higher than the lowest 5.31% in history, not to mention that the real lending rate is far above 6%, so the interest rate cut is still very necessary.

Look again.

The current CPI has dropped to around 1%, which is basically the same as 05 years.

However, PPI deflation has dropped to around -4%, much more serious than 05 years. At that time, the deposit interest rate was at least 2%, but the current deposit benchmark interest rate rose above 3%, let alone about 5% of the bank's financial return.

The deposit interest rate is too high to be conducive to consumption, so it is also necessary to reduce the deposit interest rate from the perspective of anti deflation. Only considering the background of interest rate liberalization, it may be necessary to establish a deposit insurance system first and break the rigid interest rate.

Finally, looking at employment, the pressure is not very high for the time being. Over the past 14 years, the number of new jobs increased by more than 13 million, far exceeding 10 million, because of the change in China's population structure, and the working age population contracted after the aging of the population after 2011.

Therefore, from the point of view of employment protection, it can not be released for the time being, but the problem is that employment is a lagging indicator. Therefore, as the economy continues to descend, it is not necessary to exclude the interest rate cut to stimulate employment.

Therefore, considering the fact that there are too many targets, the current decision on drainage is very difficult.

From the perspective of economy and deflation, it is necessary to cut interest rates. However, the poor pmission mechanism of monetary policy leads to ineffective drainage, and the leading power to get through the pmission mechanism of monetary policy is not in the hands of the central bank.