On December 15, the central bank carried out 1.45 trillion yuan MLF operation, with an interest rate of 250%, the same as the previous month. In December, the maturity of MLF was 650 billion yuan, and the scale of operation in the month reached 1.45 trillion yuan, that is, the amount of sequels was increased by 800 billion yuan, and the increase was further expanded on the basis of 600 billion yuan last month.
Wang Qing, chief macro analyst of Oriental Jincheng, said that the increase in the price of MLF is mainly due to the imminent large-scale issuance of 1 trillion yuan of treasury bonds, focusing on the coordination and cooperation of monetary policy and fiscal policy, controlling the financing cost of treasury bonds, and stabilizing the operation of the money market.
The net investment was 800 billion yuan.
In December, MLF continued to significantly exceed the sequel.
On December 15, in order to maintain reasonable and sufficient liquidity in the banking system, hedge the impact of short-term factors such as bond issuance and payment, and appropriately maintain the medium and long-term base currency, the central bank carried out an open market reverse repurchase operation of 50 billion yuan and a medium-term lending facility (MLF) operation of 1.45 trillion yuan, with interest rates maintained at 18% and 25% unchanged. Due to the expiration of 650 billion yuan of MLF this month, MLF continued to achieve the sequel of "volume increase and price parity", and the net investment volume hit a new high this year.
Wen Bin, chief economist of China Minsheng Bank, believes that this month's MLF continued to significantly exceed the renewal, achieving a net investment of 800 billion yuan, mainly due to four reasons: First, alleviate the expectation of tight liquidity and strengthen the coordination of monetary and fiscal policies. The second is to alleviate the medium- and long-term liquidity pressure of the banking system and stabilize the support for the real economy. Third, the interest rate on interbank certificates of deposit remains high, far exceeding the MLF interest rate, and the demand for MLF by banking institutions has increased significantly. Fourth, under multiple considerations such as efficiency improvement, air defense transfer, and exchange rate stabilization, the space of traditional aggregate tools has narrowed, and MLF and other incremental sequels have become the current policy choice.
According to the data, the monthly average yield of 1-year commercial banks (AAA-rated) interbank certificates of deposit rose to 2 in November59%, which has been higher than 2 for two consecutive months50% MLF operating rate;Heading into December, the average yield for the month ending the 14th rose further to 266%；Other short-end interest rates, such as DRO07, have also continued to operate above the short-term policy rate (the central bank's 7-day reverse repo rate).
At present, we are in a critical stage of promoting the continuous recovery of economic recovery momentum, and it is necessary to maintain reasonable and sufficient market liquidity, curb the excessively rapid upward momentum of market interest rates, and stabilize market expectations. It can be seen that the central bank has continued to implement large-scale reverse repo recently, and the large-scale increase in MLF will help alleviate the medium- and long-term liquidity pressure in the banking system. Wang Qing thinks.
There is no need for further cuts in the policy rate in the near term.
The MLF rate in December was unchanged from the previous month and has remained unchanged for four consecutive months.
Wen Bin believes that with the two cuts in the policy interest rate, the 1-year and 5-year LPR** have also been reduced by 20BP and 10BP since the beginning of this year, and the effect on credit delivery has initially appeared, and the new credit boom in the fourth quarter is relatively good. At present, it is still in the observation period of policy effect, and there is no need for further reduction of the policy rate in the short term.
On the other hand, the reduction of the interest rate of the stock mortgage has been implemented since August 31, and as of the end of September, the interest rate of more than 22 trillion yuan of the stock of the mortgage has been reduced, and the weighted average interest rate has decreased by 73bp, which has achieved the effect of partially reducing the policy interest rate to a certain extent, reducing the need for further reduction of the policy interest rate in the short term. At the same time, on December 14, Beijing and Shanghai simultaneously relaxed the real estate purchase restriction policy and lowered the lower limit of the mortgage loan interest rate, which essentially reduced the cost of new home loans, which will boost market confidence and reduce the need for another reduction in the policy rate.
Wang Qing believes that the continuous large-scale increase of MLF means that the probability of the central bank reducing the RRR for the additional issuance of treasury bonds is decreasing. However, a comprehensive RRR cut is still likely to be implemented in the short term. As of this month, the MLF balance has reached 7,075 billion yuan. Historical law shows that when the MLF balance exceeds 5 trillion yuan, the probability of the central bank cutting the reserve requirement ratio will increase accordingly. This is mainly to optimize the capital structure of the banking system and enhance the soundness of bank operations.
Structural tools such as interest rate cuts and RRR cuts are still in the central bank's toolbox.
The data shows that the MLF maturity in the first quarter of 2024 will continue to be at a high level (monthly maturity of 779 billion, 499 billion, and 481 billion respectively).
Wang Qing believes that the possibility of the central bank cutting the reserve requirement ratio to replace part of the mature MLF will not be ruled out at that time. This can also take into account the liquidity arrangements during the Spring Festival, and at the same time show that monetary policy will continue to work hard in the direction of stable growth, which will help boost market confidence and consolidate the positive momentum of economic recovery. It is worth noting that after the latest RRR cut in September, the current weighted average reserve ratio of financial institutions is about 74%, which is 5There is still some room for a lower limit of 0% reserve requirement ratio.
As for whether interest rates will continue to be cut in the future, Wang Qing believes that this will mainly depend on the macroeconomic situation, and this possibility cannot be completely ruled out. In December, the first economic work conference required that in 2024, it is necessary to continue to "promote the steady and moderate decline of social comprehensive financing costs", and domestic prices will be at a low level for a period of time in the future, and the Federal Reserve will turn to interest rate cuts in 2024, which will further reduce the constraints on the flexible operation of domestic monetary policy. It is expected that the MLF rate may be cut once in the first half of 2024. This is in line with the need to guide the level of macro interest rates and push economic growth back to potential levels.
Zhou Maohua, a macro researcher at the financial market department of Everbright Bank, said that from the perspective of China's internal and external economic environment, the total tools for interest rate cuts and RRR cuts, as well as structural tools such as MLF, re-lending, open market operations, and PSL are still in the central bank's toolbox. On the one hand, China adheres to a prudent monetary policy, the policy is in the conventional range, prices are running at a low level, the balance of payments is basically balanced, the financial system remains resilient and flexible, and the policy space is still sufficientOn the other hand, China needs to further stimulate the vitality of micro entities, strengthen coordination with fiscal and other policies, better boost market expectations, promote the steady recovery of the economy and the improvement of quality and efficiency, and continue to loosen the pattern of prudent monetary policy. Through the combination of aggregate and structural tools, the cost of investment and consumption will be reduced to meet the financing needs of the real economy.
Editor-in-charge: Shi Jian |Reviewer: Li Jinyu |Review: Li Zhen |Supervisor: Wan Junwei.