In the context of the Federal Reserve ’s rate cut, China ’s overall room for rate cuts and interest rate cuts has been opened, and the central bank is just waiting for a more appropriate time window.
The author of this article, Pan Helin, is the Executive Dean of the Digital Economy Research Institute of Zhongnan University of Economics and Law and a special observer.
On Friday (April 3), the central bank decided to reduce the deposit reserve for rural credit cooperatives, rural commercial banks, rural cooperative banks, village and town banks, and urban commercial banks operating only in provincial administrative areas. The rate was 1 percentage point, and it was implemented in two places on April 15 and May 15, with a 0.5 percentage point reduction each time, and a total of about 400 billion yuan of long-term funds were released. This is the third cut in the year.
The small and medium-sized banks were selected for this targeted reduction. Most of these banks’ customers are small, medium and micro enterprises, especially rural credit cooperatives and rural commercial banks. The aim is to release the long-term funds of small and medium-sized banks by reducing the standards so that they have More funding to support small, medium and micro enterprises. The targeted reduction will release about 400 billion yuan of long-term funds. On average, each small and medium bank can get about 100 million yuan of long-term funds, which will help to reduce the actual interest rate of loans for small, medium, and micro enterprises. .
Previously, Liu Guoqiang, deputy governor of the People ’s Bank of China, said at a press conference on the 3rd that policies such as 300 billion yuan of special reloans, 500 billion yuan of rediscount loans and 1 trillion yuan of rediscount loans were being issued. The People’s Bank of China will provide low-cost capital support to small and medium banks through re-loan and rediscount tools, and will guide small and medium banks to reduce interest rates on small, medium and micro enterprises through incentive assessments.
I believe that through a series of measures such as rewarding assessment guidance, re-loaning and rediscounting tools, and RRR cuts, as long as the policy is implemented effectively, most of the funds released by the RRR cut will flow to high-quality small and medium-sized enterprises that urgently need funding support to resume production Micro-enterprise to help them through the financial difficulties.
This time, the RRR cut has no direct effect on loan interest rates, but the deposit reserve paid by banks has decreased. From the perspective of the supply and demand of money, the supply has increased, and the price (interest rate) may be lowered. For example, the benchmark interest rate will rise and decrease. Wait.
In fact, a more important intention is to prepare for the next step to guide LPR price cuts or even interest rates. LPR price cuts and even interest rate cuts mean that the bank’s spreads have shrunk, banks’ earnings have been reduced, and motivation has been reduced. Therefore, in the context of the central bank’s request for a significant decline in future interest rates on loans, in fact, by reducing the RRR, it is actually reducing the capital cost of small and medium-sized banks, thereby reducing the pressure on capital costs of commercial banks as much as possible without reducing the deposit interest rate. Therefore, in order to guide the decline of loan interest rates in the near future, it is not ruled out that the central bank will also conduct a comprehensive RRR cut. Of course, interest rate cuts are also an option. At the same time, interest rate cuts are likely to reduce the deposit rate. Lowering the RRR or lowering the deposit interest rate will help alleviate the pressure on commercial banks to narrow the net interest margin and provide space for banks to reduce their loan interest rates, which will in turn promote the apparent decline in LPR prices.
Taken together, the current RRR cut has not eliminated the market’s market expectations for a comprehensive RRR cut and interest rate cut. In fact, in the context of the Federal Reserve ’s interest rate cut, China ’s space for overall RRR cuts and interest rate cuts has been opened. The central bank is just waiting for a more appropriate time Just the window.