The economic and financial data for March released in succession in recent days show that the downward pressure on the economy is increasing. Combined with the “timely use of monetary policy tools such as RRR cuts” proposed by the National Standing Committee, the market has a lot of calls for the central bank to cut RRR or interest rates, and there are even many There are voices calling out that April 15 is the latest policy observation window.
Regardless of the necessity of policy implementation or the room for policy maneuvering, it is feasible to cut RRR or cut interest rates in the near future. Although there is a view that my country’s economy is currently facing a complex situation of external defense against imported inflation and internal defense against increasing downward pressure on the economy, this situation has little effect on the use of monetary policy aggregate tools, but my country is currently facing demand contraction. In addition to the supply shock, the problem of weakening expectations is particularly prominent now that the epidemic is spreading in many places. If the aggregate tools such as comprehensive RRR cuts and interest rate cuts with obvious policy easing signals are launched at this time, the fastest policy transmission effect will not be able to immediately boost effective credit demand, but will be regarded as a kind of frequency with market concerns. The resonant policy feedback allows the market to feel the warmth of the policy’s proactive and timely actions, boosting market confidence.
From the perspective of policy maneuvering, there is still ample room for RRR cuts and interest rate cuts. Although the interest rate gap between China and the United States has narrowed rapidly recently, the 10-year mid-term U.S. bond yield has “inverted” for the first time in 12 years. Some views believe that this will hinder the overall easing of monetary policy. However, it needs to be emphasized that, as the world’s second largest economy, China’s monetary policy will adhere to the principle of “internal priority”. Rather than worrying about intensifying cross-border capital outflows due to the narrowing of the interest rate gap between China and the United States, the current priority of my country’s monetary policy is to help stabilize the domestic economy. What’s more, the risk of “inversion” of 10-year U.S. bond yields may be exaggerated. After taking inflation into account, the current real interest rate gap between China and the United States is still positive. In addition, with the increase in the flexibility of the RMB exchange rate, the two-way exchange rate fluctuations It acts as a shock absorber that absorbs internal and external shocks. Focusing only on the interest rate difference between China and the United States, worrying about cross-border capital flows, and ignoring the urgent need for stable growth of the domestic economy, is a waste of money for policy prediction.
April 15 will be the time when the central bank routinely operates the Medium-Term Lending Facility (MLF), which will also bring imagination to the policy rate cut. Lowering the MLF interest rate can reduce the cost of banks’ debt-side, and through the transmission path of “MLF interest rate – LPR interest rate – loan interest rate”, it will benefit the downturn in financing costs of the real economy and reduce the debt repayment burden of enterprises and residents.
However, monetary policy is not a panacea. At present, to stabilize economic growth and market expectations, we must also focus on strengthening the “hematopoietic” function of the real economy itself. Unblock the supply chain and industrial chain, let enterprises have orders, and let residents have income. Only in this way can the cash flow of the real economy itself be improved, and the expected turnaround will come naturally.