On March 21, 2022, the people's Bank of China authorized the national interbank lending center to announce the quoted interest rate (LPR) of the loan market as: 1-year LPR is 3.7%, and more than 5-year LPR is 4.6%. Compared with February, the 1-year and 5-year LPR prices remain unchanged. Our comments are as follows:
I. policy logic of keeping LPR quotation unchanged: plan before move
With the release of financial data in February, the market has high expectations for the central bank's wide money operation. On March 16, after the special meeting of the financial stability and Development Commission of the State Council, some market participants began to expect that the LPR quotation interest rate will be reduced this month, but the LPR quotation interest rate will remain unchanged this time.
We believe that the stability of LPR interest rate is in line with the current macro environment. Since February, major economic zones such as the Pearl River Delta and the Yangtze River Delta have successively broken out, which will not only restrict consumption again, but also have a certain negative impact on infrastructure and real estate construction. In addition, the situation in Russia and Ukraine overseas, the Federal Reserve's interest rate hike and the imminent contraction of the table also interfere with China's steady growth policy. We believe that at this time, the cost performance of the steady growth policy is not high. However, after the epidemic subsides, the steady growth policy is expected to increase.
II. Outlook for follow-up monetary policy: the structural monetary policy is expected to take the lead, and the aggregate policy can still be expected
On March 16, the people's Bank of China conveyed and learned the spirit of the special meeting of the financial committee of the State Council that day. For monetary policy, the central bank mentioned that "monetary policy should take the initiative to respond, new loans should maintain moderate growth, vigorously support small, medium-sized and micro enterprises, firmly support the development of the real economy and keep the economy running within a reasonable range." Among them, we understand that "active response" represents the targeted landing of monetary policy in the near future, while "strong support for small, medium and micro enterprises" represents the choice of monetary policy tools, that is, structural monetary policy tools such as small refinancing. This situation is similar to the operation of the central bank's new 300 billion small refinancing lines after the credit form analysis meeting of financial institutions held in August last year.
We have used "less credit, more money" to summarize this year's monetary policy. Its feature should be that the aggregate policy should escort steady growth. Once the economic growth data shows signs of falling short of expectations, comprehensive interest rate cuts and other monetary policies can still be expected. We believe that in the case of the decline in the impact of uncertain shocks such as the epidemic and the conflict between Russia and Ukraine, it is more cost-effective to relax monetary policy.
In addition, in March, FOMC and the US Federal Reserve have significantly reduced the economic growth of the year, which means that the downward pressure on the US economy will also be highlighted in the second half of the year. At that time, the monetary policy of the US Federal Reserve will also change from tight to loose, making more room for China's broad monetary policy.
Risk tip: the decline of economic fundamentals exceeded expectations; Inadequate understanding of monetary policy; Monetary policy of overseas central banks exceeded expectations
