Event:
On April 15, the central bank announced that it would reduce the deposit reserve ratio by 0.25 percentage points on April 25 (excluding institutions that have implemented the 5% reserve ratio).
Comments:
The time point of standard reduction is in line with the expectation, and the decline is lower than that in the past. The central bank announced that on April 25, it would reduce the deposit reserve ratio by 0.25 percentage points (excluding institutions that have implemented the 5% reserve ratio). For urban commercial banks that do not operate across provinces and agricultural commercial banks with a deposit reserve ratio higher than 5%, it would reduce the deposit reserve ratio by an additional 0.25 percentage points on the basis of reducing the deposit reserve ratio by 0.25 percentage points. The RRR reduction was mentioned at the national standing committee meeting on April 13. At this time, it was announced that the RRR reduction was in line with market expectations and the law of past experience.
The range of RRR reduction is relatively restrained and lower than the previous level. The current general reduction is only 0.25 percentage points, and each general reduction in the past few years has been at least 0.5 percentage points; After the RRR reduction, the deposit reserve ratio of financial institutions fell to 8.1%, lower than 8.4% after the previous RRR reduction. The RRR reduction released 530 billion yuan of medium - and long-term funds, down from 1.2 trillion yuan last time.
The RRR was reduced to supplement the base currency and guide institutions to increase their support for entities
The RRR reduction released the base currency and eased the pressure on bank liabilities. According to the model, the excess reserve ratio at the end of March was only about 1.48%, which was a low level in the same period in recent years. At the same time, the actual investment of medium and long-term funds such as foreign exchange and MLF was limited. At this time, the reduction of reserve requirement will release medium and long-term funds, which will help to increase the long-term and stable low-cost funds of financial institutions.
The current time point will be lowered to help alleviate the repeated impact of the epidemic on the economy. In response to a reporter's question, the central bank said that there are three purposes for reducing the reserve requirement. First, increase the long-term stable funds of financial institutions and increase support for the real economy; Second, guide institutions to support industries and small, medium and micro enterprises seriously affected by the epidemic; Third, promote the reduction of social comprehensive financing costs.
Monetary policy pays attention to internal and external balance and focuses on wide credit
The operation of monetary policy takes into account inflation, internal and external balance, etc. In response to "what are the comprehensive considerations after the RRR reduction", the central bank said that it should pay close attention to the price trend, the adjustment of monetary policy in developed economies, taking into account the internal and external balance, etc. Affected by the accelerated dominance of cost pressure, CPI inflation may exceed expectations in stages; The normalization of overseas monetary policy, the sharp narrowing of China US interest rate spread and the pressure of capital outflow may restrict the operation of monetary policy.
The focus of monetary policy is on the credit side, which cooperates with finance to maintain steady growth. Not only the RRR reduction, technological innovation refinancing, Pratt & Whitney pension special refinancing and other tool innovation, but also encouraging some small and medium-sized banks to reduce the deposit interest rate ceiling, all pointing to guiding institutions to increase support for entities and reduce financing costs. In response to the lack of effective demand, the role of fiscal policy in actively releasing demand is more prominent. The central bank's profits turned over and the surplus funds of last year are conducive to the expansion of fiscal expenditure.
Reiterate the view: the determination of "stability" in this round of policies is very strong. The idea of "stability" is more multidimensional and does not follow the old road. Steady growth has gradually shifted to the "second step". With the gradual decline of the impact of the epidemic and the appearance of the effect of stabilizing growth, the "economic bottom" may appear, and the physical demand may improve most significantly month on month in the second quarter. There is no need to be too pessimistic about the economy (see "three steps" for details).
Risk tip: the policy effect is not as expected.
