On December 3, Li Keqiang, Premier of the State Council of China, signaled another RRR cut. (Image source: Adobe Stock)
[Look at China December 5th, 2021](See a comprehensive report by Chinese reporter Ding Xiaoyu)InflationUnder the circumstances,Federal ReserveIs considering preparingInterest rate hikeOn the occasion, the Beijing authorities once again did the opposite, and the Premier of the State Council of ChinaLi KeqiangReleased on December 3RRR cutSignal.
According to media reports, professionals predict that if fiscal expenditures in December fall short of expectations, the RRR will be lowered before the end of the year. Or the credit release in January next year exceeds expectations, and the RRR cut is more likely.
On the afternoon of December 3, when Chinese Premier Li Keqiang met with Georgieva, President of the International Monetary Fund, at Ziguangge, Zhongnanhai, he signaled another RRR cut.
According to the China Securities Journal, Li Keqiang said during the talks that in the face of a complex environment and new downward pressure, China will continue to coordinate epidemic prevention and control and economic and social development, implement stable macro policies, and strengthen pertinence and effectiveness. Continue to implement a prudent monetary policy, maintain reasonable and abundant liquidity, formulate policies based on the needs of market players, use a variety of currency tools, timely reduce the RRR, increase support for the real economy, especially small, medium and micro enterprises, and promote stable overall financing costs There is a drop to ensure the stable and healthy operation of the economy.
When will the new round of RRR cuts be implemented? The Financial Associated Press reported that Dong Qi, chief macro analyst at Guotai Junan Research Institute, said that if fiscal expenditures in December fall short of expectations, the RRR will be lowered before the end of the year. During the New Year’s Eve and the Chinese New Year’s fund shortage stage, or the credit release in January next year exceeds expectations, the possibility of a RRR cut is even greater.
Wang Qing, chief macro analyst at Oriental Jincheng, said that the implementation method and time of the central bank’s RRR cut is estimated to be before the end of the year. The implementation of a comprehensive RRR cut is mainly to support small and micro enterprises; at the same time, some of the RRR cut funds may be used to replace it. MLF. Domestic monetary policy has shifted into a marginal easing cycle. The RRR cut in 2022 will continue, and interest rate cuts are also possible.
“China Securities Journal” stated in the report that some analysts said that in the face of economic downward pressure, China currently has the need and space to reduce the RRR, but the RRR cut should not be simply interpreted as a monetary policy orientation shift to easing, mainly for the purpose of Optimize the financial structure of the banking system to support its services to the real economy, especially small, medium and micro enterprises.
The report quoted Wen Bin, the chief researcher of Minsheng Bank, as saying: “my country’s economy is still facing downward pressure in the first half of next year, and the production and operation of enterprises, especially small and medium-sized enterprises, is still relatively difficult.”
The “21st Century Business Herald” also stated that there are two main reasons for pushing forward RRR cuts: First, the current economy is facing new downward pressure, and macro policies are needed. The second is to ease the operating difficulties of small, medium and micro enterprises.
According to the report, industry insiders said that if the RRR is lowered again this year, it will release a signal of moderate and stable growth while taking into account liquidity management, which will help promote a faster recovery in credit and social financing, and guide the downside of financing costs for the real economy. .
Under normal circumstances, the relatively loose monetary policy of RRR cuts is only implemented when economic pressure is high but inflation is not serious. If the inflation is very serious, the general country will adopt a policy of raising interest rates.
In July of this year, the Central Bank announced a 0.5% RRR cut, releasing 1 trillion yuan of long-term funds to stimulate the market, but with little effect.
“China Securities Journal” reported that Lian Ping, chief economist of Zhixin Investment and Dean of the Research Institute, said that the banking industry’s loan-to-deposit ratio has not changed significantly after the RRR cut in July. The debt growth of some commercial banks is difficult, and the ability to provide credit is limited. In order to maintain the steady growth of credit and support the steady operation of the economy, it is still necessary to lower the RRR again.
Some netizens said, “The flood is coming again!” “It’s only this.” “In fact, there is only one faucet in the toolbox.” “The Federal Reserve raises interest rates and we lower the RRR. Don’t you dare to do that?”
Editor in charge: Jingxin Source: Look at China
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