Directional Drop In The Implementation Of The MLF Interest Rate Is Expected To Be Lowered

On the 15 day, the central bank will reduce the number of small and medium-sized banks to 0.5 percentage points, and the reserve ratio of thousands of small and medium-sized depository financial institutions will fall below 7%. In addition, the suspension of the open market operation for many days is expected to restart. On the 17 day, 200 billion yuan will be available for medium term loan facility (MLF). Analysts believe that the central bank will probably continue to do and reduce operating interest rates by 20 basis points, and the loan market quotation rate (LPR) in April is expected to come down.

"Price and price offensive" marked effect

This year, the third drop in the 15 day began to implement, which is less than 1 months from the implementation of the universal financial system in March.

In April 3rd, the central bank announced that the rural credit cooperatives, rural commercial banks, rural cooperative banks, village banks and city commercial banks operating in the provincial administrative region only lowered the deposit reserve ratio by 1 percentage points. They were put into operation two times in April 15th and May 15th, with a reduction of 0.5 percentage points each time.

The central bank official said that the targeted reduction could release a long-term capital of about 400 billion yuan, with an average of about 100 million yuan for each small and medium-sized bank, and it could also reduce the cost of bank capital by about 6 billion yuan per annum. After the reduction, the deposit reserve ratio of more than 4000 small and medium-sized deposit financial institutions dropped to 6%, which is a relatively low level.

Most of the time after the Spring Festival, funds are relatively relaxed. With the spread of overseas epidemic and the pressure of global economy, the group of twenty emphasizes the coordination of macroeconomic policies. At the end of 3, the central bank lowered the 7 day reverse repo rate by 20 basis points. In the early April, the central bank cut the interest rate of the excess reserves of the central bank in the 12 years from 0.72% to 0.35%.

The effect of the "price and price offensive" has already appeared. The liquidity in the real economy is abundant. In March, the new social inclusion was consolidated by 5 trillion and 160 billion yuan, and the M2 growth rate jumped to 10.1% over the same period last year, exceeding the market expectations. According to the association of traders, since February 3rd, as of April 13th, the rate of issuance of bonds issued by non-financial enterprises over the maturity level of AA or above was mostly over 30 basis points, and the 1 and 3 year varieties were all down to 60 basis points.

Larger space for monetary regulation

As of 14, the central bank has not conducted open market operations for 9 consecutive working days. However, this week, we expect to usher in a "restart".

Friday (17), there will be 200 billion yuan MLF expires, as close to LPR offer day, the central bank is expected to continue to do so. At present, 4 months later or more frequent liquidity.

In addition to MLF, 24 days and 267 billion 400 million yuan in the direction of medium term loan convenience (TMLF) expired, according to past experience, the central bank rate will continue to do. In March, the resumption of work resumed production accelerated, and in April it was the first quarter of the month. It turned over the tax point for the first quarter of the business. Therefore, the tax payment peak may occur in the latter part of the year. If the funds face a greater impact, the central bank will take care of it.

Analysts believe that the 7 day period of the central bank's reverse repo operation interest rate dropped by 20 basis points at the end of 3. If the central bank carries out the MLF operation this week, it expects to have the same rate of "interest rate cut", which will lead to the next Monday (20) LPR quotation. In the next stage, price based monetary regulation will be the focus.

Wen Bin, principal researcher of China Minsheng Bank, said that with the acceleration of economic and social order recovery, prices began to fall at a high level, opening up more room for monetary policy operations. In the next stage, under the background of maintaining a reasonable and abundant liquidity, monetary regulation should be transformed from quantitative tools to price instruments. On the one hand, we should guide the Treasury bond yield curve to move down as a whole, and push the corporate bond financing interest rate down; on the other hand, we should reduce the deposit benchmark interest rate at a timely and appropriate rate, guide the LPR interest rate to fall, and further reduce the financing cost of the real economy.

With the increase of countercyclical regulation and fiscal policy, monetary policy will also be coordinated. On the 14 day, the Executive Council of the State Council pointed out that the next step is to increase the implementation of the proactive fiscal policy on the basis of enlarging the effective policies in the early stage, and step up the special local government debt in advance according to the procedures. The study further strengthens financial support for the real economy, especially small and medium-sized enterprises.

Wen bin suggested that we should strengthen the linkage between fiscal and monetary policies, increase support for major infrastructure projects, new infrastructure projects and livelihood projects in the direction of credit investment, support the upgrading of residents' consumption, raise the credit ratio of private enterprises and small and micro enterprises, and constantly optimize the credit structure.