On February 11, Beijing time, the central bank released the monetary policy implementation report for the fourth quarter of 2021. We believe that the following signals revealed in the report deserve attention.
It is emphasized to give full play to the dual functions of aggregate and structure of monetary policy tools. In terms of aggregate, we should comprehensively use a variety of monetary policy tools to support the real economy in terms of volume and price. In column 2, the report mentioned "maintaining reasonable and sufficient liquidity", invested 2.2 trillion yuan of long-term funds through reducing the reserve requirement in terms of volume, and mentioned "promoting the steady decline of comprehensive financing costs of enterprises", giving full play to the efficiency of LPR reform in terms of price. Among them, the annual loan interest rate of enterprises in 2021 was 4.61%, 0.1 percentage point lower than that in 2020. In terms of structure, the report repeatedly mentioned "continuous optimization of credit structure", which mainly includes structural monetary policy tools for small and micro enterprises, scientific and technological innovation and green development. In column 4 of the report, it is mentioned that the continuous conversion of two direct tools will be implemented from January 1, 2022. By the end of 2021, the two tools have leveraged the national banking financial institutions to issue 10.3 trillion yuan of inclusive small and micro credit loans and extend the principal and interest of 16 trillion yuan of loans. The continuous conversion of tools is more conducive to reducing the shortage of collateral and financing difficulties of small and micro enterprises, Support the work of "six stabilities" and "six guarantees"..
Emphasize reasonable and sufficient liquidity and guide attention to interest rate indicators. In column 1 of the report, the influencing factors of liquidity in the banking system are mentioned again, and the short-term influencing factors and long-term influencing factors are distinguished. The main purpose is to guide the market to observe the degree of liquidity tightness from the perspective of market interest rate, rather than quantitative indicators. From a market perspective, the most intuitive, accurate and timely indicator to observe the degree of liquidity tightness is the market interest rate. From the perspective of market interest rate, the weighted average interest rate of 7-day repo of deposit institutions in the inter-bank market is stable near the 7-day reverse repo interest rate, reflecting the flexibility and effectiveness of operation.
The macro leverage ratio has decreased steadily, which will not restrict the wide credit. In column 3 of the report, it is mentioned that stabilizing leverage has achieved remarkable results in 2021 and has maintained a downward trend for five consecutive quarters since the fourth quarter of 2020, creating policy space for increasing cross cycle regulation and enhancing the growth of total credit this year. In addition, the report also mentioned that since the outbreak of the epidemic, the growth of China's macro leverage ratio has been more controllable than that of major external developed economies, reflecting the main tone of China's self dominated policy.
Phased achievements have been made in risk prevention, and attention has been paid to it. The report mentioned in column 6 that phased achievements have been made in dealing with high-risk institutions, rectifying financial chaos, coping with external shocks and improving the financial rule of law. The stability of the financial system has been further improved, which is more conducive to serving the real economy. The report also mentioned that "the transition period of the new regulations on asset management ended as scheduled at the end of 2021, the scale of asset management products increased steadily, the structure was continuously optimized, and the proportion of net worth products increased significantly". From the perspective of the incremental structure of social finance, off balance sheet financing also maintained the trend of continuous pressure drop.
As the internal and external environment becomes more complex, it is more necessary to increase cross cycle regulation. The report mentioned that 2021 "achieved an optimal combination of higher growth, lower inflation and more employment", showing a five-year plan for high-quality development as a whole, but still facing triple pressure. Externally, we are faced with the uncertainty of the epidemic situation and the general shift of macro policies in major developed economies. We need to pay more attention to the financial risks caused by the adjustment of international asset prices and the spillover effects. In addition, in the case of high global inflation, the report mentioned that China's "CPI operation center may rise slightly in the future compared with the previous year and continue to operate within a reasonable range". It is expected that CPI will rise slightly and PPI will continue to fall throughout the year.
Risk tip: global inflation is rising too fast; Liquidity flows back to US debt; The global covid-19 epidemic has expanded its impact.
