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Original title: The central bank conducts MLF operations 800 billion experts: the possibility of a RRR cut is basically ruled out before the end of the year
Every time reporter Song Ge, internal reporter Xiao Shiqing Every time editor Liao Dan
On November 16, the central bank announced that in order to maintain reasonable and sufficient liquidity in the banking system, it will carry out a one-year medium-term loan operation (MLF) of 800 billion yuan (including the aftermath of the two MLF due dates on November 5 and 16). ), the interest rate remains at 2.95%.
The “Daily Business News” reporter noted that a total of 600 billion yuan of MLF expired this month, of which 400 billion yuan expired on November 5 and 200 billion yuan expired on the 16th, achieving an investment. single-day net of 200 billion yuan. It is worth mentioning that these are the central bank’s 4 consecutive months of overrunning the MLF due to expiration, and interest rates remain unchanged.
In the opinion of Wang Qing, chief macroeconomic analyst at Oriental Jincheng: “MLF’s operating interest rate in November did not move in line with market expectations. The 1-year LPR price announced on the 20th is expected to remain stable. unchanged. MLF has continued to outperform for 4 consecutive months., which means that the central bank is supplementing the banking system with medium and long-term liquidity to prevent the medium-term market interest rate from deviating too far from the center of policy interest rates. ”Wang Qing further noted that the excessive renewal of the MLF in November means that the possibility of implementing an RRR cut before the end of the year has further diminished. Monetary policy will remain in the“ observation period ” for some time.
Interest rates may not adjust in the short term
Since August, the central bank has renewed the MLF over the maturity period for 4 consecutive months and interest rates have remained unchanged. On the 16th, the central bank launched 800 billion yuan of 1-year MLF operations, and the expiration of the MLF in November was 600 billion yuan, which means that this month the central bank will inject 200 billion yuan. yuan of medium and long-term liquidity in the banking system through the excessive renewal of the MLF.
“The reason for the continuation excess is that the bank’s task of reducing structural deposits in the fourth quarter remains very heavy and there is an urgent need to find alternative and stable sources of funds.” Wang Qing believes that since regulatory authorities required the reduction of structural deposits in June, it has been used as an alternative product. , The issuance of interbank certificates of deposit “increases volume and price”. The average interest rate on the issuance of one-year interbank certificates of deposit in October reached 3.15%, an increase of 13 basis points compared to September; entering November, the indicator continued to increase, and the average level increased to 3.23%, which is significantly higher than the 1-year MLF operating interest rate. Affected by this, today’s banks are in high demand for MLF operations, which is a major reason for the excessive continuation of MLF this month.
In addition, he pointed out that the MLF has been renewed in excess for 4 consecutive months, which means that the central bank intends to regulate the upward momentum of the medium-term market interest rate represented by the interbank deposit interest rate certificate for avoid excessive liquidity stress in the medium and long term.
Wang Qing mentioned that, on the one hand, according to the Monetary Policy Implementation Report for the second quarter, guide the market interest rates such as the yield curve of Treasury bonds and the interest rates of the certificates of Interbank deposit to fluctuate around the MLF interest rate is one of the important objectives of current monetary policy operations. Recently, the 10-year Treasury yield and the 1-year joint stock interbank certificate of deposit interest rate have exceeded 3.20%, which is significantly higher than the MLF interest rate. The central bank’s MLF overshoot may prevent the medium-term market interest rate from deviating too far from the policy interest rate center and help stabilize market expectations.
On the other hand, interest rates in the medium-term market continue to rise, which will inevitably increase the cost of bank liabilities, which does not lead to the continuous reduction of interest rates on corporate loans by banks. before the end of the year. The impact of the current evolution of the domestic and foreign epidemic on future macroeconomic restoration cannot be underestimated. Lowering the cost of financing the real economy is an important support for stable growth and employment.
Regarding future trends in interest rates, Wang Qing analyzed that, in recent times, supervisory authorities have repeatedly stated that the current “China’s economy is relatively strong” or that “economic growth is better. Than Expected “, which means there is no need to lower policy interest rates in the short term. Future economic recovery will face greater uncertainty and there cannot be a “political cliff”, that is, a sudden tightening of policies. This shows that there are no conditions to raise policy interest rates in the short term. As a result, in November the MLF operating interest rate remained unchanged in line with market expectations, and the possibility of MLF interest rate adjustments in the coming months is unlikely.
Basically, it excludes the RRR cut before the end of the year.
The journalist noted that although the central bank has over-renewed the MLF for 4 consecutive months, the incremental scale has shown a downward trend. Specifically, the MLF incremental scale was 400 billion yuan in September, 300 billion yuan in October, and 200 billion yuan in November.
Wang Qing believes: “It may be related to the recent slowdown in the interest rate on interbank certificates of deposit.” He noted that the “currency adjustment” process is expected to come to an end before the end of the year. After the average value of the short-term market interest rate DR007 approached the policy interest rate (the central bank’s 7-day reverse repurchase rate) in August, the central bank significantly increased its trading operations. open market. As the central bank continues to increase its efforts to invest in medium- and long-term liquidity in the banking system, and banks are close to completing the task of reducing structural deposits, the market interest rate is also expected to rise to medium term represented by interbank certificates of deposit put an end to the process of continuous increase before the end of the year and “stabilize the money”. The effect is expected to be fully reflected in short and medium-term market interest rates. This means that the “monetary tightening” process from mid to late May is expected to come to an end, and the fund will go from “tight” to “stable”.
Furthermore, Wang Qing said that the excessive renewal of the MLF in November means that the possibility of implementing an RRR cut before the end of the year will be further reduced, and the monetary policy will continue in the “observation period” for some time.
He analyzed and pointed out: “The RRR cut is the most direct means to complement the banks’ medium and long-term liquidity, but it will give a stronger signal of monetary easing, which is inconsistent with the current economic situation and policy objectives. In addition, the fall in the pressure of structural deposits is not means that the bank’s overall source of funds has been significantly reduced, and more is the transfer and transfer of related funds between different banks and different financial institutions. The total amount of funds. it has not changed significantly. This means that once these funds are gradually transferred once in place, the phenomenon of mismatch between supply and demand will be alleviated. “
It judged that in this process, the central bank would preferably choose to operate through the MLF to inject medium and long-term liquidity into the banking system in stages, instead of implementing a comprehensive RRR cut and permanently expanding the medium and long-term liquidity level. long-term banks. This means that the possibility of an RRR cut can almost be ruled out before the end of the year. Considering that the possibility of policy interest rate adjustments in the coming months is also very small, monetary policy will continue in the “observation period” for some time.
