The reporter noted that in early May this year, some market analysts believed that due to the traditional corporate income tax settlement and payment time in May, fiscal deposits would rise sharply, and the increase in local bond issuance would add to the market liquidity margin. Tight, and lead to increased interest rate volatility.
Many financial market experts refuted this view, saying that there will be no significant fluctuations in liquidity in May. For example, Zhang Tao of China Construction Bank published an article entitled “Funds will remain stable in May”, arguing that because the net supply of local government bonds in May may be lower than market expectations, and the scale of single-term interest-bearing national debt issuance has declined, fiscal bonds will be issued. The disturbance of the factors will not be too great, and the corporate income tax settlement is a seasonal factor that usually exists, and it will not have a serious impact from the historical situation. In addition, the central bank will maintain a reasonable and sufficient liquidity, so the funds in May will be available. Most likely to remain stable. CICC Chen Jianheng also believes that it is not appropriate to overestimate the impact of seasonal factors on liquidity in May. Over the years, although there may be seasonal factors in May, it is rare to see abnormal tightening of funds leading to higher interest rates in the money market. Neither the increase in fiscal deposits nor the net increase in government bonds and local bonds this year will exceed May last year. There is no need to worry about capital tightening due to conventional factors such as tax payment and interest rate bond issuance.
Looking back now, it is indeed unnecessary to worry about the tightening of funds in May. Funds in the market continued to be loose in the first and mid-May. Most of the time the money market DR007 was operating below the central bank’s open market 7-day reverse repo operating interest rate of 2.20%. It did not rise slightly until after the 25th, but the fluctuation range was small and still Near the open market operating interest rate, there is absolutely no so-called tightening of funds. The average interest rate of DR007 throughout the month was 2.12%, which is 8BP lower than the current central bank short-term policy interest rate. Facts speak louder than words. The reporter observed that since mid-May, the voices in the market about the possible increase in liquidity volatility in May have disappeared.
In fact, under the policy orientation of “stability and stability” in monetary policy, it is not an empty talk for the central bank to maintain reasonable and abundant liquidity. Judging from the recent money market interest rate trends, short-term interest rates have always run close to the open market 7-day reverse repo operation interest rate. The central bank has repeatedly emphasized through the “Monetary Policy Implementation Report” and other channels that it will guide the money market interest rate to operate around the central bank’s short-term policy interest rate fluctuations, and pay more attention to the central bank’s policy interest rate level rather than the amount of operation. Therefore, market entities do not need to have unnecessary concerns about liquidity, and it is not advisable to use unfounded guesses to predict liquidity “tightening” and “volatility” and the central bank’s policy orientation, misleading market expectations and artificially creating volatility.
(The original title is “The so-called unfounded liquidity forecast can be stopped”)