After the National standing Committee sent a clear signal, under the expectation of the public, the first cut in 2022 came!

On April 15, the official of the people's Bank of China announced a "across-the-board reduction in reserve requirements" and decided to lower the deposit reserve ratio of financial institutions by 0.25 percentage points on April 25, 2022. The cut totaled about 530 billion yuan in long-term funds.

This cut is an across-the-board reduction, with the exception of some corporate financial institutions that have implemented the 5% deposit reserve ratio, a general reduction of 0.25 percentage points in the deposit reserve ratio for other financial institutions. For urban commercial banks that do not operate across provinces and agricultural commercial banks whose deposit reserve ratio is higher than 5%, the deposit reserve ratio will be reduced by an additional 0.25 percentage point on the basis of a 0.25 percentage point reduction, which will help to increase support for small and micro enterprises and "agriculture, rural areas and farmers."

The person in charge of the central bank said that the central bank will continue to implement a prudent monetary policy. First, we should pay close attention to the changes in price trends and maintain overall price stability. Second, we should pay close attention to the adjustment of monetary policy in major developed economies, taking into account internal and external balance. At the same time, we should maintain reasonable and abundant liquidity, promote the reduction of comprehensive financing costs, and stabilize the macroeconomic market.

What is the impact of the central bank's reserve cut on the stock market, property market, financial management and bond market? How should we treat this phenomenon, and how to judge the next trend of monetary policy? Is the rate of return more profitable? The latest interpretation of Huang Wentao, chief economist of CITIC Construction Investment Corporation:

Question1: what are the reasons for this reduction?

We believe that there are three main reasons for the current easing.The deep-seated reason is the increasing downward pressure on the economy and the need to provide support for the current real economy; the surface reason is that under the current situation of narrow net interest margin and in conjunction with the protection of bank profits, it is still necessary to first cut the reserve requirement to release low-cost funds, and then cut interest rates to promote the downward trend of interest rates; the external factor is that the interest margin between China and the United States has narrowed as a result of the Fed's interest rate increase, and the impact of the rate cut on the exchange rate and capital flows is relatively small.

1) the downward pressure on the economy has increased:First, the impact of the pulse epidemic has a significant impact on demand and confidence at home and abroad. At present, the domestic sporadic epidemic still has a significant impact on China's economy, consumption, real estate, infrastructure, income and other issues are facing greater pressure. Especially in the case that the first quarter economic data is about to be released, we judge that the first quarter data may be lower than market expectations. Second, the momentum of exports may decline, the momentum of economic recovery Baidu, Inc. weakens, the economic peak has passed, there are unfavorable factors in overseas recovery, and durable goods and other types of products that are in line with China's exports are also slightly overdrawn in the early stage. Third, the domestic real estate and its industrial chain are facing liquidity pressure and default impact, and the growth rate of the whole industrial chain is declining rapidly.

2) provide profit space for banks under the background of narrow net interest margin.In order to support the financial system to continue to give way to SMEs Since the second half of last year, the central bank has loosened slightly less than the market expected, mainly because the bank net interest margin is already narrow and the normal space for monetary policy is insufficient. Therefore, after the RRR cut provides banks with lower financing costs, it is more appropriate to cooperate with interest rate cuts. Keeping a certain interest rate high helps to prevent the liquidity trap and maintain the net interest margin, thus ensuring the stability of the financial system. The people's Bank of China has written many articles to emphasize that when China has the conditions to implement a normal monetary policy, it should cherish the current normal monetary policy space and continue to cut interest rates, but it should not blindly mark foreign countries. Blindly cutting interest rates may give rise to other risks, which should be considered as a whole. First, it may fall into a liquidity trap, where interest rates can no longer be leveraged to stimulate the economy, which is tantamount to giving up effective policy tools. Second, it may increase financial risks. If banks cannot maintain a normal net interest margin, it will be difficult for banks to perform the function of blood transfusion to the real economy. Third, if a bank has an operating crisis, it will also bring huge risk disposal costs. In terms of international comparison, the central bank also pointed out that the implementation of negative interest rates abroad has its special background, and we should not shoot all the bullets just because there is still room for monetary policy, and we should consider long-term development. The final use of asset purchase tools by the central bank is forced to choose, and long-term implementation will affect the role of the market.

3) domestic inflationary pressure is still relatively small at present, providing a loose window:The central bank's fourth-quarter monetary policy report believes that China's CPI will rise moderately, mainly due to oil and other commodities and food problems under the overseas crisis. The duration of global high inflation is still controversial, and the risk of inflation expectations being unanchored needs to be prevented. Policy makers need to pay close attention to the risk that inflation expectations may unanchor and prevent them from diverging "and attach great importance to global inflation expectations. At a time when inflation is low, it is the right time to ease.

Question 2: the reason why the rate of reserve reduction is slightly lower:

MLF150 billion and other volume and prices continued this morning, and the central bank cut reserve requirements by 0.25% for the first time in the afternoon, reflecting the constraints and caution faced by the central bank in the process of monetary easing.The main reasons are: first, overseas inflation and interest rate increases are expected to continue to heat up, leading to an obvious upside-down interest rate gap between China and the United States, and loose pressure and resistance have increased; second, the current net interest margin is relatively low. under the economic downturn, banks themselves need to maintain interest margin space to cover costs and deal with risks, so most central banks cut costs for banks in the early stages before cutting interest rates. For example, the reserve requirement cut before the interest rate cut in January, the deposit increase reform and the crackdown on the phenomenon of pulling deposits at high prices have all won room for interest rate spreads for banks. Third, there is upward pressure on price trends.

Question 3: how can other policies co-ordinate?

LPR1 annual decline is more likely, after all, there are 500 billion low-cost funds to release the liquidity support superimposed on the profits handed over by the central bank in the previous period, and the five-year adjustment is more difficult because housing speculation is not constrained. But if the central bank cuts deposit rates, it does not rule out the possibility (albeit smaller) of a simultaneous five-year cut.Structural policies will also coordinate efforts.Such as re-lending for scientific and technological innovation.

Through re-lending for scientific and technological innovation, the people's Bank of China guides financial institutions to further increase their support to scientific and technological innovation enterprises. The range of enterprises supported by the tool includes: "high-tech enterprises", "specializing in new and special small and medium-sized enterprises", national technological innovation demonstration enterprises, manufacturing one-way champion enterprises and other science and technology enterprises. The scope of operational support is determined in accordance with the existing standards of the Ministry of Science and Technology, the Ministry of Industry and Information Technology. Enterprises within the scope of independent selection of financial institutions shall carry out financing services. The total quota is 200 billion yuan and the interest rate is 1.75%. It adopts the direct mechanism of "borrowing first and then borrowing". After financial institutions have granted loans to enterprises, the people's Bank of China will provide quarterly financial support to 60% of the principal amount of loans for science and technology enterprises with a term of six months or more.

Financial reform will also help ease.For example, we should give full play to the effectiveness of the reform of quoted interest rates in the loan market and promote the reduction of corporate financing costs. Structurally, we should step up the establishment of scientific and technological innovation re-loans and inclusive pension special re-loans, make good use of inclusive small and micro loan support tools, increase the support of small re-loans for agriculture, implement support tools for carbon emission reduction and special re-loans to support clean and efficient utilization of coal.