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On the first working day after the Spring Festival holiday, the central bank raised the liquidity of 70 billion yuan, and raised the interest rate of reverse repurchase and SLF (maintenance of loan facilities). This was interpreted by market participants as further confirmation of the withdrawal of monetary policy. signal.
Before the holiday, the central bank announced an increase in the interest rate of MLF (interim loan lending), which is the first increase in policy interest rates in the past six years.
Although the two rates raised are the interest rates charged by the central bank when providing funds to financial institutions, and the benchmark interest rates for deposits and loans have not been raised, the significance of the weather vane is still obvious.
Lian Ping, chief economist of Bank of Communications, told the First Financial Reporter that since the fourth quarter of last year, the spread between policy interest rates and market interest rates has become larger and larger. The change in interest rates of monetary policy tools is first and foremost the change in the relationship between supply and demand of market funds. reflect.
According to the latest research report of CICC, the central bank continues to gradually withdraw from monetary easing and respond to current strong loan demand and inflationary pressures.
Zhang Xiaohui, assistant to the central bank governor, recently wrote in the "China Financial Journal" that the monetary policy in 2017 should use a combination of price tools and macro-prudential policies to strengthen the pre-adjustment and fine-tuning and adjust the currency gate.
Policy interest rate is raised overall
Around the Spring Festival, the central bank made a comprehensive adjustment to the policy rate.
On the afternoon of January 24, the central bank announced a one-year medium-term loan facility (MLF) operation with an interest rate of 3.1%, which is 10 basis points higher than the previous operation (one base point is one in ten thousand). This is the first time in the history of MLF operations to raise interest rates, and the policy rate has been raised for the first time in nearly six years.
On February 3, after the Spring Festival, the central bank raised the 7-day, 14-day, and 28-day reverse repo rates by 10 basis points. On the same day, the SLF rates of overnight, 7 days, and 1 month were raised by 35, 10, and 10 basis points respectively.
In particular, the SLF interest rate is regarded as the upper limit of the interest rate corridor. The market interprets this as implying that the central bank's tolerance for interest rate rise is further increased.
Lian Ping told CBN that the change in interest rates of monetary policy instruments is first and foremost a concrete manifestation of changes in the relationship between supply and demand of market funds.
The chief analyst of CITIC Securities's fixed receipts clearly believes that from the perspective of the effectiveness of policy interest rates, the policy interest rate hike is due to the expansion of market interest rates and policy interest rate spreads.
Since the fourth quarter of last year to January this year, the interest rate fluctuations of the entire money market have risen, and the overall interest rate level has increased significantly compared with the first three quarters of last year. The deviation between market interest rates and policy interest rates is growing.
Taking the 7-day reverse repo operating rate and the market 7-day interbank pledged repo rate as an example, the 7-day reverse repo in the open market of the central bank in 2016 remained unchanged at 2.25%, but since July 2016, whether it is 7 days SHIBOR (Shanghai Interbank Offered Rate) The interest rate is still a 7-day interbank pledged repo rate, both showing an upward trend.
Before July 2016, the 7-day SHIBOR rate and the 7-day reverse repo operating rate spread level were around 10 BP (base point). By January 2017, this spread widened to 40 BP, while the 7-day interbank pledged repo The spread between interest rate and benchmark interest rate is even more in the midst of aggravated shocks. On December 28, 2016, the 7-day silver mortgage rate hit a maximum of 4.05%, which is 1.8 percentage points lower than the benchmark interest rate.
"When the interest rate of the market itself goes up, if the interest rate of the monetary policy tool is not adjusted, the spread between the two will give the market institutions speculation, so the central bank will increase the reverse repo, MLF, SLF, etc. to the market. The interest rate of funds, thus increasing the financing costs of financial institutions, is subject to changes in the relationship between supply and demand in the market." Lian Ping told reporters.
However, Lian Ping stressed that the impact of raising the policy interest rate is not as big as the traditional increase in the interest rate of deposits and loans, and it cannot be simply equated with raising interest rates.
"At present, deposits in China's financial institutions still account for an absolute proportion of credit. In the new social financing scale, credit still accounts for about 70%, and more than 80% of the financing stock is credit. In this case, the adjustment of deposit and loan interest rates will have an impact. Much bigger." Lian Ping told reporters.
At present, the central bank only raises the interest rates of reverse repurchase, MLF, SLF, etc., which is to increase the capital cost of financial institutions. Whether this will be transmitted to financial institutions to increase the interest rate of corporate and personal loans, but also depends on the supply and demand of loans. If the loan demand is insufficient, even if the interest rate of the fund rises, it will not necessarily put pressure on the loan interest rate.
"Now it is still operating in the interbank. The transmission needs a process. Does it affect the real economy, including the real estate industry? It still needs time. The first thing that affects some bond investors, shadow bank participants, etc., they will take the lead. Leverage and shrink the operation of the balance sheet." Shao Yu, chief economist of Orient Securities, told reporters.
Intended to "de-leverage"
And the intention to raise the policy interest rate deeper is still the policy goal of “de-leveragingâ€.
First of all, from the credit data of December last year, the medium and long-term loans of enterprises continued to increase substantially. Although the medium and long-term loans and the proportion of residents have all declined, the overall credit growth rate is still too fast. Not only that, but the credit expansion in January 2017 is expected to exceed the “day volume†of the same period last year. This is contrary to the policy direction of deleveraging.
Secondly, the level of leverage of the shadow banking of small and medium-sized financial institutions is also relatively high. Take the bond market as an example. According to the calculation of the CITIC Securities collection team, the proportion of inter-bank liabilities of small and medium-sized banks has shown an upward trend since 2010. By December 2016, this proportion has reached 21.66%, compared with November 2016. It is on the rise, so the bank’s leverage ratio is still high.
"Therefore, the central bank needs to suppress the intention of the banks, especially the small and medium-sized financial institutions, to reduce leverage by releasing relatively clear signals." Shao Yu told the First Financial Reporter that this is one of the intentions of the central bank to comprehensively adjust the policy rate.
In addition, before the holiday, the central bank released a liquidity through TLF (temporary liquidity convenience). The central bank worried that this may send a loose signal to the market. It needs to adjust the price to inform the market that the monetary policy is still neutral. On the track.
In fact, at the Central Economic Work Conference held in December last year, the monetary policy for 2017 was clearly adjusted. The meeting pointed out that monetary policy should be stable and neutral, adapt to the new changes in the mode of money supply, adjust the currency gates, and strive to smooth the channels and mechanisms for the transmission of monetary policy, and maintain the basic stability of liquidity.
Compared with the previous work, the work conference continued to emphasize “the prevention and control of financial risks to a more important position†and “focus on prevention and control of asset bubblesâ€, but did not mention “maintaining sufficient liquidity†but emphasized "Adjust the currency gate."
Lian Ping said that this means that “monetary policy can no longer be as loose as it used to be, and the market interest rate should be raised appropriatelyâ€.
Not a rate hike cycle
The central bank raised the policy rate for the first time in the past six years, and market participants once interpreted it as a rate hike cycle.
Deng Haiqing, chief global economist of Kyushu Securities, believes that this indicates that the central bank's monetary policy has gradually entered a tightening cycle from the loose cycle, from implicit tightening to dominant tightening.
Ren Zeping, chief economist of Founder Securities, also believes that the policy interest rate has been raised upwards and has actually raised interest rates, revealing the policy attitude of the central bank.
However, Lian Ping believes that raising the policy interest rate does not mean that the entire monetary policy is moving in the direction of continuous tightening. At present, this condition is not available in China.
He stressed that changes in the interest rate of money market instruments should not be immediately tied to interest rate hikes. The concept of raising interest rates is very clear is the increase in the benchmark interest rate of central bank deposits and loans. This change in benchmark interest rate reflects the willingness of the central bank to adjust its monetary policy.
Regarding the impact of liquidity, Lian Ping believes that it will not be as large as the market expects. At present, the external environment uncertainty is still relatively large, China's economic growth is still facing downward pressure, and asset prices and bubbles have not yet reached a comprehensive and substantial rise. In this case, monetary policy still maintains a stable and neutral tone. The possibility of continuing to tighten the direction is relatively small.
Shao Yu also said that it is still not a rate hike cycle, because the economic fundamentals, including inflation data, are not clearly good enough to enter a state of full tightening. The central bank did not adopt a more traditional tool to adjust the deposit and loan interest rate and the deposit reserve ratio with the intention of policy meaning, because it did not want to express the policy intention of comprehensive contraction.
The wind has really changed behind the overall upward adjustment of policy interest rates.
Abstract The wind direction may have changed. In the context of financial anti-foam and anti-risk, the liquidity of “sufficient†as in the past may be gone. On the first working day after the Spring Festival holiday, the central bank is returning 70 billion yuan in liquidity...
The wind may have changed. In the context of financial bubbles and risk prevention, the liquidity of “sufficient†as in the past may be gone.