Xinhua News Agency, Beijing, February 21 (Reporter Xiang Jiaying) "Economic Information Daily" published an article on February 21 "Monetary Policy Moves Forward to Cut Interest Rates Beyond Expectations". According to the article, the loan market** interest rate (LPR) will usher in the first drop in 2024. On February 20, the latest LPR** was released: the 1-year LPR "stood still" and was 345%；LPR over 5 years by 42% to 395%, a sharp 25 basis point reduction, the decline exceeded market expectations. Analysts pointed out that due to the large decline in LPR for more than 5 years, the actual downward range of LPR is generally larger, which will effectively drive the comprehensive financing cost of the society to continue to decline, and further enhance the financial support for the real economy.
The PBOC's choice to cut the LPR interest rate at this critical time reflects the consideration of monetary policy to move forward and make a good start. An authoritative expert in the industry pointed out that China's economic growth rate will reach 5 in 20232%, which is affected by low base factors. If we want to continue to maintain a reasonable economic growth rate this year, we need to make macroeconomic policies move forward in the first quarter to reflect the policy results as soon as possible. As a benchmark for bank loan pricing, LPR is directly related to the changes in financing costs and financial expenditures of enterprises and residents, and the decline in LPR in February will help further drive down the real lending rate, promote the steady decline of social financing costs, and stimulate the effective demand of the real economy.
From the specific operation, the central bank's operation is an asymmetric interest rate cut. Talking about the reasons for this situation, CITIC ** Chief Economist Ming Ming said that historically, the adjustment of LPR for more than 5 years is small, and there is a need to make up for the reduction. At the same time, since the end of last year, the People's Bank of China (PBoC) has achieved and met the conditions for adjusting the long-term LPR by lowering the deposit rate and cutting the reserve requirement ratio.
In addition, Wen Bin, chief economist of China Minsheng Bank, pointed out that the sharp decline in LPR of more than 5 years is conducive to better promoting investment and consumption, better cooperating with the release of the effects of various recent real estate stabilization policies, supporting the steady and healthy development of the real estate market, and also helping to reduce interest expenses in the process of local ** debt replacement and alleviate risks.
It is worth noting that the LPR with a maturity of more than 5 years has been significantly reduced this time, which is the main reference benchmark for the pricing of personal housing loans. This also means that after this adjustment, the lower limit of the national mortgage interest rate policy will be adjusted to 3 with the LPR75%, the interest rate of the new mortgage will be reduced, and the interest rate of the existing mortgage will also be adjusted accordingly on the repricing date, which can save the interest expense of the owner.
The sharp and unexpected decline in LPR for more than 5 years first sent a strong signal to boost residents' housing consumption and promote the steady development of the real estate market. After the decline of LPR with a maturity of more than 5 years, the interest expense of residents' housing loans will be reduced, which will help boost residents' willingness and ability to consume housing. For existing mortgages, the mortgage interest rate will be adjusted after the repricing date; For new mortgages, it is expected that most banks will keep the increase on the basis of this LPR, thereby reducing the effective interest rate of new mortgages. Dong Ximiao, chief researcher of Zhaolian, said.
At the same time, Dong Ximiao pointed out that the sharp decline in LPR for more than 5 years will also reduce the interest rate of medium and long-term loans for enterprises and institutions, and further stimulate the medium and long-term financing needs of enterprises and institutions. This will be conducive to major national projects and infrastructure construction with a high proportion of long-term loans, and will also help reduce the pressure on local debt interest expenses.
In the past year, the characteristics of monetary policy have been further highlighted, and financial support for the real economy has been further enhanced. On January 25, the re-lending and re-discounting rates for supporting agriculture and small enterprises were lowered by 025 percentage points, on February 5, the statutory reserve ratio was lowered by 05 percentage points, the release of medium and long-term liquidity of about 1 trillion yuan, is conducive to reducing the cost of bank funds. Industry insiders pointed out that the 1-year LPR remained unchanged, and the LPR of more than 5 years declined, which not only maintained reasonable support for the real economy, but also took into account the internal and external balance, and improved the resilience to external shocks and the autonomy of policies.
Looking ahead to the follow-up monetary policy, the market generally expects inflation to pick up moderately this year, and real interest rates still have room to fall. Under the current situation of insufficient effective demand and weak expectations, maintaining a low interest rate level will help continue to support the recovery of the national economy, and there is still room for monetary policy to respond to various shocks and challenges in the future.
Dong Ximiao expects that in the next stage, the People's Bank of China will continue to reduce the policy interest rate, guide banks to reduce deposit interest rates, promote the continuous decline of LPR, further reduce the financing cost of the real economy, and create a more suitable monetary and financial environment for the accelerated recovery and sustained recovery of the economy. In other words, whether it is the policy interest rate or the market interest rate, whether it is the deposit interest rate or the loan interest rate, there is still room and possibility for the next step to fall.
Zhou Maohua, a macro researcher at the financial market department of Everbright Bank, believes that as the economy is currently in a critical stage of recovery, tools such as follow-up interest rate cuts are still in the toolbox, but the specific implementation needs to depend on the recovery progress of domestic demand, the pace of price recovery, and the recovery of real estate. (ENDS).