The Central Bank'S First Mention Of " Robust Neutral " Monetary Policy Did Not Mention Raising Interest Rates.

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The central bank issued the report on monetary policy implementation in the fourth quarter of 2016, reported the overall operation of monetary policy in the 4 quarter of 2016, and pointed out the keynote of the next stage.

In the next stage, the central bank will implement a prudent and neutral monetary policy.

First, we should optimize the combination and maturity structure of monetary policy instruments and maintain moderate liquidity.

On the basis of reducing the deposit reserve ratio by 0.5 percentage points at the beginning of the year and supplementing the long-term liquidity gap, we will make more use of open market operations, medium term lending facilities, standing loan facilities and mortgage supplementary loans to provide flexible liquidity for different periods.

At the same time, we should establish an open market daily operation normalization mechanism and carry out normal operation of medium term liquidity.

Two is to promote the gradual pformation of the regulatory framework.

On the one hand, we should continue to strengthen the pmission mechanism of price regulation and control, explore the mechanism of building interest rate corridors, and pay attention to maintaining interest rate elasticity in a certain range, matching with the changes in economic operation and financial market, and giving full play to the functions of price adjustment and guidance.

After 7 days of reverse repo rate operation, the release policy was luckily, and the 14 and 28 day counter repo varieties were appropriately increased to guide and optimize the time structure of the currency market.

Three, we should further improve the macro Prudential policy framework suited to our national conditions.

The dynamic adjustment mechanism of the differential reserve fund, the macro Prudential assessment of the provincial Commission for Discipline Inspection (MPA), conducts multi-dimensional guidance on the behavior of financial institutions, expands the macro Prudential Management of cross border financing to the nationwide financial institutions and enterprises, adjusts the real estate credit market according to the principle of "city policy", and strengthens the macro Prudential Management of housing finance.

Four, we should promote the optimization of credit institutions and support economic restructuring and pformation and upgrading.

We should give full play to the credit policy to support the role of refinancing, rediscount and mortgage supplementary loans, window guidance and so on. We should create a poverty alleviation loan and bring private banks into the scope of support for small loans, and guide financial institutions to increase support for key sectors and weak links in the national economy such as small and micro, three rural areas, and shed reform.

At the same time, we must firmly promote the reform of financial market, further improve the framework of monetary policy regulation and dredge the pmission channels.

Sound monetary policy has achieved good results.

The liquidity of the banking system is reasonable and abundant, the scale of money and credit and social financing has increased steadily and the interest rate level has been running at a low level. The exchange rate of RMB against a basket of currencies has remained basically stable, and the elasticity of bilateral exchange rate has increased further.

At the end of 2016, the broader balance of money supply M2 increased by 11.3% over the same period last year.

The balance of loans increased by 13.5% over the previous year, an increase of 12 trillion and 650 billion over the beginning of the year, an increase of 925 billion 700 million yuan compared with the same period last year, and a 12.8% increase in the scale of social financing.

In December, the weighted average interest rate of loans for non-financial enterprises and other departments was 5.27%. In the next stage, the people's Bank of China will adhere to the general keynote of steady progress in accordance with the strategic plan of the Party Central Committee and the State Council, implement a sound and neutral monetary policy, and better balance the relationship between steady growth, structural adjustment, anti foam and risk prevention, so as to create an appropriate monetary and financial environment for supply side structural reform.

For the first time, the "stable neutral monetary policy" and "liquidity basically stable" were put forward.

The central bank's monetary policy formulation first adopted the expression of "moderate neutral monetary policy", which changed the formulation of "prudent monetary policy" in the past. At the same time, the formulation of liquidity was also changed from "maintaining a reasonable liquidity adequacy" to "maintaining liquidity basically stable". All of these changes were obviously different from the previous executive reports, which verified the turning point of the central bank's policy liquidity. In the first half of 2015 and 2016, the situation of over easy monetary market will not continue to appear, and the monetary policy tightening in 2017 will be tightened.

Guotai Junan macro team also believes that monetary policy will emphasize more neutrality.

Guotai Junan macro team pointed out that the three quarter mentioned "a stable monetary policy", and in the four quarter, it added two words of "neutrality" to "robust neutral monetary policy", and liquidity will continue to tighten.

In the three quarter, "liquidity is reasonable and abundant", while the four quarter became "basically stable liquidity", indicating that the central bank intends to tighten liquidity gradually.

Clearly put forward "put prevention and control of financial risks in a more important position", highlighting the need to guard against risks.

Guotai Junan macro team pointed out that the central bank report clearly listed the off balance sheet financing business into a macro Prudential assessment, and gradually explored more financial activities and financial markets into macro Prudential Management, maintaining a moderate and moderate monetary and financial environment, and achieving moderate growth in monetary credit and social financing scale.

At the same time, the two pillars of "monetary policy + macro Prudential policy", which first put forward the framework of financial regulation and control, indicate that the central bank may be able to work together in the face of financial risks.

Shen Wan Hongyuan macro Li Huiyong and Wang Jian analysis, the 4 quarter loan interest rate rebounded, overstock rate rose sharply.

In the fourth quarter of 2016, the weighted average interest rate of loans rose by 5 BP to 5.27%, the first time since the three quarter of 2014.

Among them, the interest rate of bills rose substantially from 85 BP to 3.9%, and the rate of mortgage loans was flat at 4.52%, while the general lending rate continued downward to 5.44%.

The uplink of loan interest rate is largely driven by the interest rate of note financing, which may be mainly related to demand recovery and financial leverage to raise capital costs.

Overrun rate rose sharply.

In the fourth quarter of 2016, the excess reserve ratio of financial institutions increased by 70 BP to 2.4%, significantly better than the same period in 2015, higher than the average level since 2008.

They believe that the sharp rise in overrun rates, on the one hand, includes seasonal factors; on the other hand, it also reflects the low willingness of banks to finance and finance, which may be related to the precautionary policy that banks may tighten and take precautions against.

Guotai Junan macro team believes that the central bank's views on the global economy are more optimistic, but at the same time expressed concern about the Fed's interest rate hike and contraction.

The three quarter report said that "the overall global economy is still weak." the report said that "the global economy is showing a recovery trend and some of the developed economies are likely to grow faster."

At the same time, the central bank's concerns about the Fed's interest rate hike and contraction have increased significantly. This report adds to the uncertainty of the Fed's interest rate hike and the shrinking schedule, and the pressure of the internal adjustment of the global asset bubble accumulated over the past few years in the extremely loose monetary policy environment.

They think the central bank is right.

The outlook is also more optimistic.

On the part of China's economy, the central bank believes that "a lot of factors are conducive to stable economic growth" and "the downward pressure on the economy has been reduced".

At the same time, the central bank also stressed that the internal and external situation in the coming period is still very complex, and there are many challenges for economic development and structural adjustment.

Ren Zeping issued a view that the central bank's confidence in the economic stabilization and recovery has been enhanced, but it is not very worried about the rise in inflation expectations. Monetary policy puts the risk prevention in a more important position, turning to a robust neutral or even neutral.

The central bank emphasized

The dual pillar policy framework of the "macro Prudential policy" is to enable the money market to "raise interest rates" under the new monetary policy framework, adjust the currency gate and limit speculative investment.

The purpose of monetary policy turning to neutral is to prevent risks from deleveraging, to support the real economy and to achieve "de going to reality".

Credit and investment in the near future are beyond expectations. After the housing market debt market regulation, banks have increased loans to the real economy. After the completion of the local government, the investment impulse of the local government has brought the infrastructure investment exceeding expectations. The improvement of corporate profits has brought about a substantial increase in the capital expenditure of equipment which had been postponed in the past few years.

Taking into account the expected credit and investment in the first quarter, the recovery of this cyclical cycle is expected to last until the two quarter. Therefore, the tight monetary policy is expected to extend to the 2 quarter.

A comprehensive analysis of "the darkest times of debt market" has passed.

We are no longer pessimistic about the bond market as it was at the end of 2016, suggesting that investors should seize opportunities in the concussion market.

We formally put forward the "dark era of debt market" in November 2016, which has been fully verified after the market, but recently our views have begun to change.

On the one hand, the bond market yield has enough large interest rate protection than the reverse repurchase bid interest rate; on the other hand, although the central bank may continue to raise the winning rate, the possibility of raising the real interest rate to the market in December 2016 is very low. In the bond market price, Price-in has already tighten monetary policy expectations. In addition, the value of the bond relative to the credit is prominent, and the configuration disk has begun to escort the bond market after the Spring Festival.

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