Economic Inflation Differentiation: Central Bank May Raise Policy Interest Rate

Overseas economy: US interest rate rises and stock debt rises.

The Fed expects to raise interest rates in March.

The interest rate prediction dot matrix shows that the Fed expects interest rates to reach 1.4% by the end of 17, consistent with last year's forecast in December, which means a total increase of 3 rates in 17 years and 2 hikes in the year, not as expected as the Hawks, the dollar index plunged and the debt gold rose.

US Treasury Secretary Nouchine said last week that President Trump did not intend to launch a trade war or oppose free trade, but that trade between the United States and some countries should be more balanced.

The US 20 trillion debt ceiling expired on Wednesday. The US Treasury Secretary urged Congress to raise the debt ceiling as soon as possible last week. Given that the White House and Congress are dominated by Republicans, the two sides will probably agree on the possibility of a debt crisis in the United States this year.

Domestic policy: real estate regulation and control.

In March 17th, Beijing, Guangzhou, Shijiazhuang and Zhengzhou issued new real estate policies respectively.

Since the end of February, a total of 15 cities have tightened the policy of the property market. Among them, Beijing launched the policy of recognizing houses and accepting loans, that is, the proportion of the down payment of housing should not be less than 60% as long as there is housing or loan records.

The State Council executive meeting decided to divide the responsibilities of the government work report, and demanded that the economic operation be kept in a reasonable range.

At the meeting, Premier Li Keqiang of the State Council requested that we should stick to the general keynote of steady progress, expand the momentum of economic stability and promote the continuous increase of farmers' income and expand their share.

Organize experts to tackle haze management.

The economy is hot and cold.

The economy improved in 1-2 months, but production and demand were uneven.

On the one hand, industrial production is still booming.

In the 1-2 month, the growth rate of industrial added value rose to 6.3%, while the growth of crude steel output increased nearly 3 years to 5.8%. In the first half of 3, the growth rate of coal consumption increased further to 15.9%, which means that industrial production remained stable in March.

On the other hand, demand is cooling.

1-2 month real estate sales growth of 25.1%, mainly due to the three or four line real estate sales exceeded expectations, and since March, with the purchase restriction and mortgage tightening, 27 three or four line city real estate sales volume -9%, the second tier cities decline is still more than 30%, which means the early rebound is only short-lived.

In the 1-2 month, auto retail sales dropped to -1% on a year-on-year basis, and dragged down the growth rate of consumption. The first two weeks in March, the retail sales of passenger cars increased by -8% compared with the same period.

Differentiation intensified.

In February, the CPI ring fell 0.2%, up 0.8%, down sharply compared with January, mainly due to the surge in pork prices during the Spring Festival last year.

Since March, food prices have continued to decline, predicting that CPI food prices in March will be stable at 1.1% lows compared with -1.5% and CPI.

In February, PPI rose narrower to 0.6%, up from 7.8% last year.

Last week, oil prices were lowered, coal prices and steel prices continued to rise, production data prices were still high, forecast PPI in March rose 0.3%, PPI rose slightly to 7.6%.

The fall of CPI in February and the rise of PPI came from the differentiation of industrial and agricultural products prices. Since March, this pattern has not changed. Food prices continue to fall and industrial prices are still high. An important reason behind this is that the gap between the rich and the poor caused by the bubble of property prices has widen, and the price of real estate has been rising, but at the same time, the crowding out effect on downstream consumption has also occurred. In the short term, the pattern of inflation differentiation will continue.

Overweight.

Following the increase in January, the total volume of new social and financial aggregates dropped to 1 trillion and 350 billion in February, while both domestic and overseas financing decreased.

In February, 1 trillion and 170 billion of new financial institutions were granted loans, while long loans among residents decreased significantly.

Social credit loans have dropped, fiscal deposits have increased, and the superposition of basic money has quickly returned to the market. The M2 in February dropped slightly to 11.1%.

The elimination of the Spring Festival factor was superimposed on the low base last year. In February, the M1 growth rate rose to 21.4% again. However, with the real estate sales continuing to cool down and the financial deleveraging risk prevention going forward, the downward trend of M1 will continue.

Last week, the central bank again raised interest rates such as reverse repo, MLF and SLF. This is a response to the pressure of US interest rate hikes and to stabilize the RMB exchange rate.

At the same time, it also means that the leverage of financial leverage will help inhibit asset price bubbles and coordinate MPA to control the expansion of banks.

For the sake of financial leverage and stable exchange rate, if the Fed continues to raise interest rates, the Central Bank of China will still have a chance to raise the policy interest rate again.

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