source: Shanghai Securities News
From the perspective of industry insiders, the continuation of the central bank’s equal measures has released a signal that policies support moderately loose bank liquidity in the medium and long term.
The central bank launched a 500 billion mid-term loan facility (MLF) operation yesterday to accurately hedge the maturity; the operating interest rate is 2.95%, maintaining the previous value unchanged. This is the second consecutive month that the central bank has continued to do MLF at equal prices. Market participants believe that the central bank may introduce more structural policy tools in the fourth quarter.
The MLF maturity volume in October was 500 billion yuan, the third highest level since the beginning of the year. From the perspective of industry insiders, the continuation of the central bank’s equal measures has released a signal that policies support moderately loose bank liquidity in the medium and long term.
Zhou Maohua, a macro researcher at the Financial Markets Department of Everbright Bank, said that the central bank will continue to do the same amount of MLF maturity, and the price is stable, mainly to maintain reasonable and sufficient market liquidity. The central bank uses a variety of tools to flexibly respond to short-term disturbances, indicating that the central bank is maintaining a moderate amount, emphasizing the accuracy of monetary policy to support the real economy, and enhancing the effectiveness of policies.
Since the RRR cut in July, interest rates in the mid-market have fallen sharply. Among them, the 1-year commercial bank (AAA-level) interbank deposit certificate, which is the benchmark interest rate in the mid-market, has the monthly average yield to maturity from 2.88% in June to 2.66% in August, and a slight rebound to 2.70% in September. Significantly lower than the medium-term policy interest rate, and the “inversion” rate has not changed much.
“Under such a background, the central bank continued to do MLF with a high amount this month, indicating that the policy supports the current moderately loose liquidity in the current banking system in the medium and long term, which will help launch a round of marginal credit in the fourth quarter.” Chief Executive Jincheng Oriental Macro analyst Wang Qing believes that financial data such as credit and social financing growth in September basically touched the bottom of this round of “tight credit” process. From October onwards, it is expected to enter a small recovery process, and the process of marginal wide credit may begin.
In addition, from the perspective of operating interest rates, the current MLF interest rate has been “in place” for 19 consecutive months. Moreover, the central bank’s reverse repurchase operation interest rate has been maintained at 2.20% recently, and the short-term policy interest rate has continued to be stable. Industry insiders believe that policy interest rate cuts are expected to further cool down, and the central bank may follow up with more structural monetary policies.
Looking forward to the fourth quarter, MLF interest rates are expected to remain unchanged. Wang Qing said that the current policy side emphasizes inter-cyclical adjustment, and the central bank has repeatedly emphasized the need to “cherish the normal currency space”, which means that the overall growth stabilization policy will be relatively moderate in the future. Among the many alternative policy tools, it is unlikely that policy-based interest rate cuts will be implemented in the short term.
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