(Original title: LPR has remained flat for 9 consecutive months; how do you view the follow-up trend?丨Fireline Interpretation)
The agency said that the probability of lowering the MLF interest rate and LPR quotation in the second quarter of 2023 is not high.
The LPR was released in May, and the interest rates of the 1-year and 5-year varieties were the same as the previous month, and have remained unchanged for 9 consecutive months.
On May 22, the People’s Bank of China authorized the National Interbank Funding Center to announce that the loan market quotation rate (LPR) on May 22, 2023 is: 3.65% for 1-year LPR, and 4.3% for LPR with a term of more than 5 years.
Why is the LPR quotation unchanged in May?
On May 15, the People’s Bank of China announced that in order to maintain reasonable and sufficient liquidity in the banking system, it carried out a 125 billion yuan medium-term lending facility (MLF) operation and a 2 billion yuan open market reverse repurchase operation, which fully met the needs of financial institutions. The winning bid rates were the same as the previous period.
Dongfang Jincheng believes that the LPR quotation in May remains unchanged, which is in line with market expectations. At the same time, the overall recovery process of the current macro economy continues, and the urgency of lowering LPR quotations is not high.
Zhou Maohua, a macro researcher at the Financial Market Department of Everbright Bank, said that the MLF interest rate, which is the anchor of the LPR interest rate, remains stable. The financial data from January to April show that the current market interest rate is at a reasonable level, and the pressure on the net interest margin of some banks has increased in recent years. On the whole, the threshold for LPR interest rate cuts is still high in the short term.
How do you view the follow-up trend?
On May 15, the central bank released a report on China’s monetary policy implementation for the first quarter of 2023. The report pointed out that we will continue to deepen the market-oriented reform of interest rates, improve the central bank’s policy interest rate system, continue to leverage the efficiency of the loan market quotation interest rate reform, and give full play to the important role of the deposit rate market-oriented adjustment mechanism to maintain a reasonable and appropriate level of interest rates.
In addition, according to the interest rate information published on the official websites of various banks, recently, Ping An Bank, Guilin Bank, Sichuan Tianfu Bank and other banks have announced that they will lower the interest rates of call deposits and agreement deposits from May 15th, with a drop between 20bps and 55bps .
Dongfang Jincheng said that the current net interest margin of banks is relatively low, coupled with the relatively large increase in deposit interest rates in the first quarter, in order to promote the steady decline in financing costs of the real economy in the next step, banks will choose more efforts on the liability side, and moderately reduce Various deposit interest rates are an inevitable choice, but this does not mean that the possibility of LPR quotation reduction in the short term increases. According to the market-based adjustment mechanism of deposit interest rates, the level of deposit interest rates should be reasonably adjusted with reference to the 1-year LPR quotation and the yield of 10-period treasury bonds, not the other way around. This means that although the recent reduction in deposit interest rates will reduce the cost of funds for banks, it will have little incentive for banks to lower their LPR quotations in the short term.
Everbright Securities believes that the probability of lowering the MLF interest rate and LPR quotation in the second quarter of 2023 is not high. (1) Due to the impact of the epidemic in the second quarter of last year, the base level of various macroeconomic indicators was low. (2) The immediate reduction of MLF and LPR quotations in a short period of time will aggravate the structural inversion of deposit and loan interest rates. (3) In the second half of the year, it is not ruled out that an opportunity will be adopted to cut interest rates.
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