The Central Bank's High Frequency "Anti Deflation" Shows That Economic Stall Is The Main Contradiction At Present.

Just after the Spring Festival holiday, the central bank announced on February 28th evening that the benchmark interest rate for deposit and lending has dropped by 0.25 percentage points since March 1, 2015, of which the one-year lending benchmark rate of financial institutions has been reduced by 0.25 percentage points to 5.35%; the one-year deposit benchmark interest rate has been reduced by 0.25 percentage points to 2.5%, and the upper limit of the floating interval of financial institutions' deposit interest rates has been adjusted to 1.3 times the 1.2 times of the deposit benchmark interest rate. This is the first time that the central bank has cut interest rates this year. It is also a continuous operation in three months after a rate cut and a reduction.

The choice of time is more than that of the overwhelming majority of people, indicating that the current economic environment is indeed not optimistic. In the first quarter, the growth rate of GDP is likely to be lower than that of the PPI. It is possible for the PPI to continue downward. The "deflation approaching" is likely to evolve into substantial deflation, and monetary policy can no longer be "robust". Two, the choice of time points is also different from the past. On the 28 day is Saturday (not the usual Sunday), it is obvious that the central bank consciously emphasizes the "urgency" and shows that the attitude of growth is firm. Although the interest rate cuts are expected by many researchers at home and abroad, there are still a few points beyond expectations: first, to cut interest rates.

The high frequency "anti deflation" operation of the central bank also tells us that the high level has ended the wait-and-see period and has recognized the "deflation and the downward pressure on the economy" is the main contradiction facing the Chinese economy.

It must be admitted that how to understand the term "new normal" has been debated in the past. Many people believe that tolerance of slow growth is the new normal. In the next few years, China's economic growth rate even below 7% is the fastest in the world. It is not a worry. Many people believe that there are many sources of risk in the current Chinese economy, but the main contradiction is caused by the old growth mode or super fast growth. Therefore, it is appropriate to tolerate low growth and wait for economic transformation to solve these problems.

These two opinions are biased. I have always thought that China's economy should not move at a speed below 7%, and below 7% is still a dangerous signal. China's economic growth must be strong, and the so-called strong growth is to overcome the pressure of below 7% and achieve a growth rate of at least 7.3% in 2015.

Continuous lowering of interest rates is not only an adjustment of monetary policy, but also shows that China's economy can not be separated from investment and real estate in the short term, but also can not be separated from import and export.

At present, it is moderately stimulating in a relatively depressed economy. equity market To stabilize the property market is the "usual practice" of macroeconomic regulation and control of the major countries in the world. On the contrary, if the market and stock market are overly suppressed, the virtual financial market, including semi virtual financial market, is stagnant, and the property income of the whole society has shrunk dramatically. I expect that the interest rate cut will not be a big stimulus to the stock market. In the future, the stock market will continue to follow the trend of slow cattle and will not go mad. As for the property market, the current biggest risk has already pointed to "too low interest". Interest rate cuts, including loose expectations, should play a positive role in stabilizing the property market. I believe there will be a new market related property market coming out in the future.

　　 Rate cut And whether or not it will lead to a sharp fall in the RMB exchange rate? I think the central bank decided to cut interest rates first, that is, not afraid of the decline of the RMB exchange rate, and the ability to control exchange rate declines. In fact, the central bank chose to cut interest rates first, which is a decision after repeated trade-off. The renminbi will not depreciate significantly in the future, and the moderate depreciation should be welcomed by the central bank.

In short, 2015 global economy The main keynote is to develop together, and strive to achieve strong growth. Once the medium and long term development of China's economy is clear, policy will change, not only monetary policy, but also real estate policy, stock market policy and industrial policy. We must try our best to increase the income of residents, stimulate consumption by increasing incomes, and in turn stimulate production. In the meantime, we must moderately tolerate inflation rising. This logical chain is complementary to each other and indispensable.