How long can China press for 667 times in the global interest rate cut in 8 years?

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Summary of August 11, the Bank of New Zealand (hereinafter referred to as "New York Fed") announced that it will cut its benchmark interest rate by 25 basis points to 2.0%, a record low. In order to raise inflation and lower the value of the currency, the New Zealand Reserve said it may need to further relax the goods...
On August 11, the New Zealand central bank ("New Zealand Federal Reserve") announced that it will cut the benchmark interest rate by 25 basis points to 2.0%, a record low. In order to raise inflation and lower the value of the currency, the New Zealand Reserve said it may need to further relax its monetary policy.
So far, since the "Lehman moment", the global central bank has cut interest rates by 667 times.
After the announcement of the interest rate decision, the New Zealand dollar (NZD)/US dollar not only fell but fell sharply. FXTM China market analyst Zhong Yue told the “First Financial Daily” reporter that as the market had already expected to cut interest rates, the New Zealand dollar had “selling news, buying facts” and it has soared more than 1%. Other reasons include the unclear prospects for interest rate hikes, which are reflected in the decline in US Treasury yields.
The strong contrast is that the People's Bank of China has been exercising restraint on RRR cuts and interest rate cuts in recent months. Not long ago, the National Development and Reform Commission removed the policy of “cutting the opportunity to further reduce interest rates and lowering the standard” in the policy research room article. Does this mean that China will still remain inactive?

The reasons for the global interest rate cut are different
Since June of this year, Russia, South Korea, Australia, the United Kingdom, and New Zealand have cut interest rates successively, and their logics are different.
As far as New Zealand is concerned, its inflation level is always at a low level, and the value of the New Zealand dollar is already at a high level, which is detrimental to economic prosperity. "The stronger exchange rate makes the inflation target more difficult to reach. The central bank has made it clear that further measures will be taken to curb inflation downwards," said Kathy Lien, an analyst at New York Mellon Bank.
The New Zealand economy is highly dependent on exports. Since last year, commodity prices have plummeted, dairy prices have fallen, and global demand has shrunk, putting pressure on the New Zealand economy. According to statistics, the value of New Zealand dairy products is about $6 billion a year.
In fact, the New Zealand central bank can take action earlier, but policymakers worry that this may fuel the real estate market bubble. New Zealand housing prices continue to rise, and bubbles have accumulated in recent years. Recently, the Bank of New Zealand has also introduced macro-prudential supervision, which has increased the minimum deposit ratio for buying houses and avoiding the need for speculative purchases. This also provides room for the New Zealand Federal Reserve to cut interest rates.
As far as Russia is concerned, the reason for its interest rate cut is very different from that of other countries. Deng Haiqing, chief global economist of Kyushu Securities, pointed out that Russia is returning from high interest rates to normal interest rates, mainly because of the containment of hyperinflation, and there is almost no intention of economic stimulus.
"Russia's interest rate cut was reduced from 11% to 10.5%, mainly due to the significant decline in Russia's hyperinflation. In 2015, Russia's CPI center was 15%. In 2016, Russia's CPI has fallen back to around 7%, which is the main reason for Russia's interest rate cut. Deng Haiqing said that since 2016, with the obvious rebound in oil prices, the Russian economy has rebounded significantly, and the industrial production index has rebounded from -5% in 2015 to 2%. Therefore, the Russian central bank does not have the possibility of cutting interest rates because of the stimulus.
The rate cut in South Korea is surprising. The Bank of Korea said the rate cut was mainly due to economic concerns caused by South Korean corporate restructuring and the sluggish global trade.
Australia's interest rate cuts are directed at low inflation. Australia's CPI for the second quarter of 2016 was only 1%, the lowest level since 1999. At the same time, the appreciation of the Australian dollar exchange rate will complicate the economic adjustment, and the Australian employment market indicators are mixed. As the possibility of low interest rates exacerbating the risks in the real estate market is decreasing, this has also alleviated the concerns of the RBA to cut interest rates.
The Bank of England’s interest rate cut on August 4 was in line with market expectations. In order to hedge the long-term economic drag brought by Brexit, the Bank of England announced the first rate cut of 25 basis points in seven years, and the interest rate level was lowered by 0.55% from 0.50%. At the same time, the central bank's asset purchases in August expanded by 60 billion pounds to 435 billion pounds.
Previously, the UK's leading indicators have turned down. The UK PMI fell sharply to 47.7 in July, the lowest since 2009; the UK's second-quarter industrial production confidence index fell to its lowest level since 2009, and the third-quarter orders are expected to fall to the lowest since 2012; the Bank of England's 2017 GDP growth forecast is 2.3. % is lowered to 0.8%.

How long can the Chinese central bank press?
Recently, the market's expectation of further easing by the Chinese central bank seems to have fallen to the bottom. However, in the context of the global interest rate cut, how long will the Chinese central bank press?
The People’s Bank of China stated in the “Report on China’s Monetary Policy Implementation in the Second Quarter of 2016” issued on August 5 that “the central bank’s liquidity supply pattern has changed. In the first half of 2015, liquidity was mainly provided by lowering the statutory deposit reserve ratio. In the first half of 2016, liquidity was mainly supplied through monetary policy operations such as open market and medium-term lending facilities.
Nomura Securities pointed out that in the first half of the year, open market operations have caused long-term interest rates to fall, which also implies that the central bank seems to be more confident about the market-oriented monetary policy framework. At the same time, this year, the “scissors difference” between M1 and M2 data has been expanding and hitting a new high in June this year. This has caused Chinese companies’ “liquidity trap” to receive much attention, which makes the market question the true effect of lowering interest rates.
However, Zhao Yang, chief economist of Nomura China, told the reporter of China Business News that capital outflows are not the result of the contraction of the central bank’s balance sheet, but the main reason. Capital outflows are fundamentally caused by factors such as slowing economic growth and rising private asset allocations in the private sector, rather than lowering prices. Therefore, Nomura expects that the central bank still needs further RRR cuts to hedge the negative impact of capital outflows. It is expected to cut interest rates once in the second half (25 basis points) and downgrade twice (50 basis points respectively), one of which is likely to be in August. appear.
It is worth noting that the bond market yield is also closely related to the overall interest rate. On August 10th, the yield on the 10-year bond issued this year fell below 2.7%, setting a new low since January 9, 2009. Even brokers are boldly predicting that this level of interest rates may fall to 1.7%.
Although the central bank's interest rate cuts are still expected this year, Deng Haiqing also pointed out that for the bond market, if the central bank does not further monetary easing, then the long-term bond yields must be bottomed out, over-investing in long-term bonds, and at 4,000 points. Buying stocks on the top is similar to the “dangerous game” of drumming and flowering. It is necessary to be alert to the “stock disaster” in the bond market.
Li Qilin, a people's livelihood, said to reporters that the 10-year government bond interest rate may fall to 2.5%, but the probability of breaking 2% is low.

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