The People’s Bank of China decided to take off and land by 0.5 percentage points from September 27th.
The People’s Bank of China announced on September 27th that it has decided to reduce the deposit reserve ratio of financial institutions by 0.5 percentage point from September 27th, 2024 (excluding financial institutions that have implemented the deposit reserve ratio of 5%). After this reduction, the weighted average deposit reserve ratio of financial institutions is about 6.6%.
The People’s Bank of China stated that it will adhere to a supportive monetary policy stance, increase the intensity and accuracy of monetary policy regulation, and create a good monetary and financial environment for China’s stable economic growth and high-quality development.
The People’s Bank of China announced on September 27th that in order to strengthen the countercyclical adjustment of monetary policy and support the stable economic growth, the operating interest rate of the 7-day reverse repurchase in the open market will be adjusted from the previous 1.70% to 1.50%, which is 20 basis points lower than the previous one.
In addition, the announcement shows that the operating rates of 14-day reverse repurchase and temporary forward and reverse repurchase in the open market continue to be determined by adding and subtracting points on the operating rate of 7-day reverse repurchase in the open market, and the range of adding and subtracting points remains unchanged.
Zou Lan, director of the Monetary Policy Department of the People’s Bank of China, said that the central bank has made it clear that the operating interest rate of the 7-day reverse repurchase is the main policy interest rate, and changed the bidding of the 7-day reverse repurchase from the original interest rate to the fixed interest rate and quantity bidding, which fully met the bidding needs of primary dealers. The interest rate is no longer the result of winning the bid, but is determined by the central bank according to the needs of implementing monetary policy. The quantity is no longer a means for the central bank to adjust liquidity, but is jointly determined by primary dealers according to the policy interest rate and their market judgment, which is conducive to upgrading institutions.
The central bank’s statement: fully promote the financial incremental policy measures to accelerate the landing.
On the afternoon of September 26th, the People’s Bank of China held a system-wide video conference to study and implement the spirit of Politburo meeting of the Chinese Communist Party on September 26th, and made every effort to promote the recent financial incremental policy measures to accelerate their implementation. Pan Gongsheng, Party Secretary and President of China People’s Bank, attended the meeting and delivered a speech.
The meeting stressed that Politburo meeting of the Chinese Communist Party made a profound analysis of the current economic situation and made clear plans for the next economic work, and the People’s Bank of China should act quickly, go all out and fully implement it. It is necessary to speed up the introduction of documents on financial incremental policies and measures, and do a good job in implementing various policy measures item by item. It is necessary to strengthen departmental coordination, set up relevant work classes, and make concerted efforts throughout the system to effectively promote sustained economic recovery and high-quality financial development.
This policy interest rate reduction is the largest in the past four years.
"This policy interest rate reduction is the largest in the past four years, which is an important embodiment of supportive monetary policy and will reduce the comprehensive financing cost of society through transmission." Dong Ximiao, chief researcher of Zhaolian, said that the policy interest rate was lowered by 20 basis points, which reflected the requirement of "strength". Under the market-oriented interest rate regulation mechanism, the benchmark interest rates in various markets will be lowered. Earlier, Pan Gongsheng, governor of the People’s Bank of China, announced at the press conference on September 24th that he would cut interest rates in the near future, and the bid-winning interest rate in the MLF operation launched on September 25th dropped by 30 basis points. It is expected that this policy interest rate reduction will also guide the deposit interest rate and the loan market quotation rate (LPR) to go down simultaneously, and keep the net interest margin of commercial banks stable. At the same time, interest rate cuts will promote the reduction of comprehensive financing costs of the real economy and support stable economic growth.
Dong Ximiao believes that the sharp interest rate cut by the central bank will continue to boost market confidence. With the support of a series of recent incremental policies, the market expectation has obviously improved. The People’s Bank of China announced the interest rate cut at 8: 00 this morning, which is conducive to maintaining the continuity of policy intensity, further condensing the consensus of high-quality development, and consolidating the foundation of the capital market’s sustained and stable development, providing sufficient impetus for the healthy and upward development of the market.
Source: Xinhua News Agency, People’s Daily
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