Will the central bank cut interest rates and reserve requirements in 2015?

On the 12th, Qu Hongbin, chief economist of HSBC Greater China, said on his Weibo that in order to more accurately and timely grasp the changes in financing conditions of the overall economy, HSBC compiled the China Financing Conditions Index. He also expects a 25 basis point rate cut and a 100 basis point RRR cut in the second half of this year.

According to the index's calculations, domestic financing conditions were relatively tight in March this year, mainly due to the continued strengthening of the real effective exchange rate of the renminbi (14% year-on-year appreciation in the first quarter), low inflation pushing up real interest rates, and a gradual slowdown in the growth of money**. Qu Hongbin pointed out that further easing is necessary. A 25 basis point rate cut and a 100 basis point RRR cut are expected in the second half of the year.

The index is based on three important indicators that measure financing conditions, namely: the growth rate of real money** volume, the correlation between real interest rates, real effective exchange rates, and their different contributions to real economic growth.

Qu Hongbin said on his Weibo that the index was compiled and the impact of internal and external factors on financing conditions was taken into account. It not only comprehensively reflects the difficulty of China's financing conditions in different periods, making it possible to compare over periods, but also reflects the main driving force behind the tightening of financing conditions, thereby providing assistance for policy formulation and interpretation.

Hello, the central bank has cut interest rates and reserve requirements at the end of the year, that is, on December 28. The central bank's RRR cut means to reduce the deposit reserve ratio, which is paid by commercial banks to the central bank, which has the characteristics of mandatory payment and can prevent risks such as runs.

Assuming that the original reserve requirement ratio is 25%, then if a customer deposits 1,000 yuan in a commercial bank, the commercial bank must pay 250 yuan to the central bank, and the remaining 750 yuan can be loaned abroad. If the reserve requirement ratio drops to 20%, if the customer deposits 1,000 yuan in a commercial bank, the commercial bank only needs to pay 200 yuan to the central bank, and 800 yuan can be loaned abroad.

Extended information: 1. What is a central bank?

The central bank refers to the People's Bank of China, which is the constituent department of the People's Republic of China. Founded on December 1, 1948, the People's Bank of China, under the leadership of the People's Bank of China, formulates and implements monetary policy, prevents and defuses financial risks, and maintains financial stability. In accordance with the provisions of the Law of the People's Republic of China on the People's Bank of China, the People's Bank of China independently implements monetary policy, performs duties and conducts business under the leadership of the People's Bank of China, without interference from local governments, social groups and individuals.

The main business of the People's Bank of China is the formulation of monetary policy, the formulation and implementation of credit policies, the organization and management of the treasury, credit management, supervision and audit of financial institutions, etc., for example, we often hear that the benchmark interest rate for loans and the benchmark interest rate for deposits are formulated by the People's Bank of China, and financial institutions must implement them.

Second, the main functions of the central bank.

According to relevant laws and regulations, the main responsibilities of the People's Bank of China are:

1) Formulate strategic plans for the reform and development of the financial industry, undertake comprehensive research, coordinate and solve major problems in financial operations, promote the coordinated and healthy development of the financial industry, participate in the impact assessment of major financial mergers and acquisitions related to national financial security, and put forward policy recommendations to promote the orderly opening up of the financial industry.

2) Drafting relevant laws and administrative regulations, improving the business rules of relevant financial institutions, and issuing orders and rules related to the performance of duties.

3) Formulating and implementing monetary policy in accordance with the law; Formulate and implement macro credit guidance policies.

4) Improve the financial macroeconomic regulation and control system, be responsible for preventing and resolving systemic financial risks, and maintain national financial stability and security.

Implement an appropriate monetary easing policy.

The central bank's RRR cut this time will release 1 trillion yuan of funds, which is conducive to investment and consumption, and promotes balanced social and economic development.

The central bank's interest rate cut is to reduce the interest on deposits and loans, and the RRR cut is to reduce the reserve ratio.

1: China cuts interest ratesOn September 15, 2022, six large state-owned commercial banks, Industrial and Commercial Bank of China, China Construction Bank, Agricultural Bank of China, Bank of China, Bank of Communications, and Postal Savings Bank, announced that they will adjust the listed interest rate of RMB deposits from September 15, 2022. Sixth, this is the second time that the central bank has cut the reserve requirement ratio this year.

The first RRR cut was on January 6 this year: In order to support the development of the real economy and reduce the actual cost of social financing, the People's Bank of China lowered the reserve requirement ratio of financial institutions by 10% on January 6, 2022.

May 21, 2022 17:33 Sichuan May 20, 2022, the People's Bank of China authorized the National Interbank Lending Center to announce; On May 20, 2022, the loan market** interest rate (LPR) is: 1-year LPR, 5-year LPR or more; According to the China Manned Space Engineering Office, at 12:44 on September 30, 2022, Beijing time, after about 1 hour of space-earth coordination, the Wentian experimental module completed the transposition.

Subsequently, the space station assembly will fly in orbit in an "L" configuration, waiting for the Mengtian experimental module to be launched.

0 The central bank cut interest rates on August 22 this year, and it was a double cut. Second, the borrowing rate was lowered in July this year. Next year's deposit interest update 2022 ICBC three-year time deposit interest rate is ICBC time deposit interest rate is the latest in 2022 The latest news on the central bank's interest rate cut and RRR reduction II, May 20, the People's Bank of China authorized the National Interbank Lending Center to announce, May 20, 2022.

The third interest rate cut in 2022Today, the central bank issued the "Announcement on the National Interbank Funding Center Authorized to Publish the Loan Market ** Interest Rate (LPR) on August 22, 2022". According to the announcement, the 1-year LPR is and the LPR is more than 5 years.

Although the Fed has raised interest rates four times since 2022, with a cumulative range of 225 basis points, and at the same time, China is cutting interest rates slightly, the real interest rate in the United States is at a negative low level, and China's real interest rate is in a positive and reasonable range. From this perspective, U.S. stock valuations are biased.

The first step was to cut the reserve requirement ratio (RRR), which the central bank cut in July and December 2021 respectively. The second step is to cut interest rates, on December 20, 2021, the one-year LPR interest rate will be lowered, and the one-year MLF interest rate and the 7-day OMO interest rate will be lowered on January 17, 2021, both by 10BP, and on January 20, experts said that under the influence of factors such as controllable inflationary pressure and the spillover effect of the Fed's interest rate hike cycle has passed its peak, the prudent monetary policy will continue to increase its implementation in the second half of the year, with sufficient room for regulation and control, it is still possible to cut the RRR and interest rates, and the incremental tools to deal with the risk of uncertainty have a plan.

The RRR cut will not necessarily be followed by an interest rate cut. Interest rate reduction generally refers to the reduction of the benchmark interest rate of loans or the benchmark interest rate of deposits; The RRR cut is to reduce the deposit reserve of the bank, and the deposit reserve paid by the bank to the central bank is less, and the amount of money used for lending will increase, which is equivalent to releasing liquidity.

Extended information: 1. Advantages of RRR reduction.

1) ** Banks have the initiative and are less affected by the outside world, which better reflects the policy intentions of the central bank.

2) Have a rapid, powerful and widespread impact on the amount of money.

3) Acting on all banks and depository financial institutions, the time and degree are fair and consistent.

Second, the disadvantages of RRR reduction.

1) The policy effect is too drastic and inflexible, and it is greatly affected by the excess reserves of banks in the banking system and cannot be used frequently.

2) Increase the instability of bank operations, and policy measures are not reversible to a certain extent.

The RRR cut "has a limited impact on the property market. First of all, the reduction of the reserve requirement ratio is super good for bank stocks, and at the same time good for **, good for the property market.

Third, the significance of the RRR cut.

Through the RRR cut, the first is to increase the liquidity of the market, so that commercial banks can have a stronger ability to provide credit, after the reserve is lowered, the bank's funds are relatively more abundant, which is good for credit; Second, through the relatively loose liquidity of funds, it will help the market interest rate level to fall, and after the deposit reserve ratio is lowered, commercial banks can obtain about 15 billion yuan of cost reduction, and after the cost drop, it will also help banks to provide lower financing costs and credit funds in the future. At the same time, it is not ruled out that the MLF interest rate will be lowered to affect the reduction of the LPR interest rate, so as to reduce the financing cost of enterprises.

Fourth, the impact of the RRR cut.

1. Industry configuration.

China Securities Construction Investment believes that, first of all, the second stage of the bull market will constitute the best industry, in the long run, China's economic development direct financing, capital market reform for brokerages is also good for the long-term. Second, interest rates are falling, the economy is changing, and the valuation level of long-term growth stocks has increased faster, coupled with the improvement of earnings expectations, which is optimistic about the long term. Third, credit easing, declining interest rates, and increased countercyclical efforts also have good opportunities for sectors with low valuations and reversal of difficulties in some cycles (such as chemicals and automobiles).

Fourth, consumption has also become the main demand for endogenous growth, which is also a direction worth sticking to for a long time. Fifth, after the interest rate falls, the allocation value of the high-dividend sector is fixed.

2. Monetary policy.

The central bank said that it will continue to implement a prudent monetary policy, do not engage in flood irrigation, pay attention to directional regulation and control, take into account internal and external balance, increase counter-cyclical adjustment, maintain reasonable and abundant liquidity, maintain the growth rate of broad money M2 and social financing scale and nominal GDP growth rate basically match, and create a suitable monetary and financial environment for high-quality development and supply-side structural reform.

What does the central bank's RRR cut and interest rate cut mean?

It is to let the whole people manage their finances, not to save their brains in the bank to eat dead interest, in order to encourage the whole people to get rich and manage their finances.

This is a means of macroeconomic regulation and control. To put it simply. The amount of money that cannot be touched by the central bank has been reduced, and the interest rate deposited in the bank has also decreased. There is more money that can be liquid in the market.

On October 7, the central bank announced a 1% RRR cut, which was much stronger than expected (basically before, releasing 750 billion incremental funds.

Extended information] First, whether to cut interest rates is decided by the People's Bank of China; Interest rate reduction generally refers to the reduction of the benchmark interest rate of loans or the benchmark interest rate of deposits; The RRR cut is to reduce the deposit reserve of the bank, and the deposit reserve paid by the bank to the central bank is less, and the amount of money used for lending will increase, which is equivalent to releasing liquidity.

Second, the interest rate cut is beneficial to the borrower who handles the loan, the loan interest rate in the loan contract will be recalculated after the interest rate cut, and the amount of the borrower's monthly repayment will be reduced, but when to adjust it also depends on how the contract is stipulated, and the borrower can call the bank ** for consultation after the interest rate cut. A cautious interest rate cut is when banks use interest rate adjustments to change cash flows. When banks cut interest rates, the return on depositing funds in the bank decreases, so the interest rate cut will cause funds to flow out of the bank, and deposits will become investments or consumption, and as a result, the liquidity of funds will increase.

Third, the RRR cut and interest rate cut are adjustments made by the central bank according to the development of the economy, but when to adjust the ordinary people are not able to do so, and the role of the two different policies is not the same. In normal times, you can pay more attention to the announcement of the People's Bank of China, so that you can know when to cut the RRR or interest rate.

Fourth, for China, the independence of monetary policy can be understood as whether China has the initiative to raise interest rates (interest rate cuts), RRR (RRR increases), etc., and whether it is interfered with by the external environment; The stability of the exchange rate is whether the renminbi is stable or fluctuates sharply; The free movement of capital is relative to capital controls. Taking Hong Kong, China as an example, Hong Kong Xiang Nai implemented the linked exchange rate system, that is, the Hong Kong dollar and the US dollar are pegged, and the exchange rate of the US dollar against the Hong Kong dollar has always been maintained at 1:, and Hong Kong is a world financial center, and the financial opening up is very large, that is, Hong Kong has chosen the free flow of capital and exchange rate stability at the same time, so under the triple paradox, Hong Kong has lost the independence of monetary policy, and Hong Kong often has to passively follow when the Federal Reserve raises interest rates or cuts interest rates.

Fifth, the situation in Chinese mainland is the same, after the RRR cut on October 7, the person in charge of the central bank said: the yuan will not form depreciation pressure. At the same time, it also stressed that "necessary measures will continue to be taken to stabilize market expectations and maintain the smooth operation of the foreign exchange market".

In other words, China has chosen the stability of its exchange rate. At the same time, in the case of continuous interest rate hikes by the Federal Reserve, the People's Bank of China not only did not follow, but also announced a RRR cut, that is, China's independence in choosing monetary policy, and the "decoupling" of China-US monetary policy.