Information or event:
On February 15, 2022, the central bank launched 300 billion yuan of one-year MLF operation and 10 billion yuan of seven-day reverse repurchase operation in the open market, with the bid winning interest rates of 2.85% and 2.10% respectively. Volume and price rise remain unchanged. So where will quantity and price monetary policy go next?
In terms of monetary quantity, in order to maintain reasonable and sufficient liquidity, it is less difficult to fine tune the marginal of quantitative instruments, and it is also more likely to continue to adjust in the future.
In terms of currency prices, it is difficult to adjust. Although monetary price adjustment can effectively reduce financing costs, it has a long-term impact on the normal space of monetary policy and is constrained by overseas accelerated tightening in the short term.
In general, we believe that under the background of great pressure on steady growth, in order to support economic development, reducing financing costs is still the direction of the central bank and the whole financial system. However, under the background that the wide credit data exceeds expectations, external factors restrict the adjustment of policy interest rates, and the low net interest margin restricts the increase and reduction of LPR, the expectation of interest rate reduction in the short term has cooled down. However, if the data of wide credit and stable growth in the first quarter is less than expected, the expectation of interest rate reduction may be repeated.
