The LPR quotation, which the market is concerned about and has divergent views, was released on July 20: the 1-year loan market quote rate (LPR) is 3.85%, and the LPR over 5 years is 4.65%, and the quotation has remained unchanged for 15 consecutive months.

In addition, when the central bank renewed the mid-term lending facility (MLF) in July, the winning interest rate was also on hold. The market is particularly concerned about the trend of monetary policy after the overall RRR cut.

Why did the LPR interest rate stand still after the overall RRR cut?

Everbright Securities pointed out that the improvement in the cost of debt was not enough to drive the LPR reduction in July.

According to an optimistic calculation method, the institution has concluded that the RRR cut policy has improved the comprehensive liability cost of joint stock banks by about 1-4bp, but overall, it has reduced It is expected that the improvement in the comprehensive debt cost of the joint-stock bank is still not enough to drive the 5-bp adjustment of the 1-year LPR quotation. That is, based on the principle of commercialization, the LPR quotation in July should not be lowered.

China Securities Investment also believes that the motivation for lowering bank loan quotation rates is insufficient. Although the replacement of some MLF funds with the RRR cut in July will help reduce the bank’s capital cost, and the policy direction of the bank’s interest-bearing entity will remain unchanged, the current deposit liability side and the maturity of interbank certificates of deposit still restrict the marginal cost of funds for banks. Financial institutions in the first quarter The weighted average interest rate for corporate and personal housing loans both rebounded slightly.

On the other hand, the 5-year LPR is linked to the mortgage interest rate. At present, the policy adheres to the main theme of “housing to live without speculation” and strictly controls the illegal flow of funds into the real estate market. At present, the “three red lines” control the asset side and the “five-tier housing loan” control mode of controlling the capital side have been formed.

” After the central bank cuts its RRR, it will cut interest rates again. Then the market will definitely think: What bad things have happened that they don’t know will cause the policy level to be so anxious. This has a negative impact on economic expectations. From the perspective of “cherishing the monetary policy space”, if the economy has not stalled before adopting an interest rate cut operation, then the space afterwards will be reduced.” Pacific Securities pointed out.

Wen Bin, the chief researcher of China Minsheng Bank, pointed out that the dot plot of the Fed’s meeting on interest rates in June showed that the interest rate hike exceeded market expectations in advance. Employment has improved significantly, inflation has continued to rise, and the strong economic recovery has driven the US dollar index back to above 93. These signs all indicate the need to be wary of the Fed’s early shift.Risk, this is also a practical issue that my country needs to consider when adjusting interest rates including LPR.

Although the policy interest rate remains unchanged, the market still has expectations for a subsequent reduction.

CITIC Securities pointed out that there are still large-scale MLF expirations in the remaining months of the year. Historically, after the RRR cut, open market operations are dominated by net withdrawals, and further attention needs to be paid to subsequent MLFs. Operation and the possibility of lowering the RRR again. If there is no further RRR cut in the future, the liquidity level will still face certain pressure. In terms of cost reduction, LPR continues to remain unchanged, and the role of financial support for the real economy is still limited. It is not ruled out that under the premise of a stable and neutral monetary policy, the possibility of continuing to advance reforms to reduce costs.

Soochow Securities believes that short-term policy interest rates will remain stable, and there is a possibility of lower LPR.

“At present, China’s economy remains stable and the prices of bulk commodities are under control. It is expected that the policy interest rate will remain stable in the short term, and there is no incentive for upward or downward breakthrough. From the perspective of reducing social financing costs, the reform of early deposit interest rate pricing has opened up space from the liability side. One-year LPR may be lowered through compression and additional points. At the same time, the early bulk commodity price increase has caused a squeeze on the profits of mid- and downstream companies. Under pressure, lowering the LPR can ease the pressure on business operations.” The agency believes.