The central bank cut its reserve by 0.5 percentage points

In the market's expectation, the first reduction in 2020 is coming. On January 1, 2020, the people's Bank of China released a message that in order to support the development of the real economy and reduce the actual cost of social financing, the people's Bank of China decided to reduce the deposit reserve ratio of financial institutions by 0.5 percentage points (excluding financial companies, financial leasing companies and auto finance companies) on January 6, 2020. The central bank's head said that the reduction was a comprehensive one, reflecting counter cyclical adjustment, releasing more than 800 billion yuan of long-term funds, effectively increasing the stable sources of funds for financial institutions to support the real economy, reducing the cost of funds for financial institutions to support the real economy, and directly supporting the real economy. This reduction in liquidity is conducive to achieving the growth of monetary credit and social financing scale in line with economic development, creating a suitable monetary and financial environment for high-quality development and supply side structural reform, and using market-oriented reform methods to dredge monetary policy guidance, which is conducive to stimulating the vitality of market players and further exerting the decisive role of the market in resource allocation To support the development of real economy.

As for whether the reduction of the standard is conducive to alleviating the financing difficulty of small and micro enterprises and private enterprises, the relevant person in charge of the central bank said that the reduction increased the sources of funds for financial institutions. Only urban commercial banks operating in the provincial administrative regions, rural commercial banks serving the county, rural cooperative banks, rural credit cooperatives, rural banks and other small and medium-sized banks obtained 1200 long-term funds More than 100 million yuan is conducive to strengthening the capital strength of small and medium-sized banks based on the local and returning to the source to serve small and micro enterprises and private enterprises. At the same time, the reduction of the standard reduces the bank's capital cost by about 15 billion yuan per year. Through bank transmission, the actual cost of social financing can be reduced, especially the financing cost of small and micro enterprises and private enterprises. At the same time, the relevant person in charge of the central bank stressed that the reduction will form a hedge against the cash delivery before the Spring Festival, and the total amount of liquidity in the banking system will remain basically stable, flexible and moderate, rather than flooding, reflecting the scientific and stable grasp of the counter cyclical adjustment of monetary policy, and the stable orientation of monetary policy has not changed.

In fact, the market has long expected this reduction. On December 23, 2019, Premier Li Keqiang pointed out during his visit to Chengdu that "the state will further study and take various measures such as reducing and directional reducing the standard, refinancing and rediscount, reduce the actual interest rate and comprehensive financing cost, and promote the obvious alleviation of the financing difficulty and high cost of small and micro enterprises." In an interview with Securities Daily, a number of analysts believed that the central bank would announce the reduction of the standard in the near future. Pan Helin, executive director of the Digital Economy Research Institute of Central South University of finance, economics and law, told Securities Daily that the purpose of the reduction is to reduce the cost of real economy capital. The reason why we chose early January as the time window is mainly based on two reasons. One is that near the Spring Festival, there is a large demand for market capital, especially the scale of cash demand of banks is higher than usual. The other is that the local debt is expected to be higher in January 2020 Centralized issuance, combined with the large scale of bank credit at the beginning of the year, requires a large amount of medium and long-term capital injection. The reduction of the standard can release low-cost capital to the bank and provide sufficient liquidity for the market. "The overall reduction of 0.5 percentage points is in line with market expectations."

Wen bin, chief researcher of China Minsheng Bank (6.310,0.00, 0.00%), said that in view of the fact that 600 billion yuan of reverse repo is due in January 2020, and the factors such as tax payment, issuance of special bonds by local governments, and cash demand during the Spring Festival, the 800 billion yuan released through the reduction of reserve can meet the above liquidity needs on the one hand, and on the other hand, the release of low-cost long-term funds is conducive to the reduction of bank To guide banks to reduce the financing cost of real economy. It is predicted that on January 20, 2020, the price of LPR for the new phase will decrease slightly, with 4.1% for one-year period and 4.75% for more than five-year period. Wang Qing, chief Macro Analyst of Dongfang Jincheng, said in an interview with the Securities Daily that it is expected that the 1-year LPR quotation on January 20, 2020 will be reduced by 5 basis points, and there will be one or two overall reductions in 2020. He pointed out that according to the new LPR quotation mechanism, in the process of LPR quotation every month, commercial banks should not only refer to MLF interest rate, but also add points on this basis, which mainly consider the bank's capital cost, risk premium level and credit market supply and demand. Along with this reduction in reserve to promote the downward trend of bank capital cost, the 1-year LPR quotation on January 20 is expected to resume the downward trend of about 5 basis points. In addition, taking into account the macro-economic development trend in 2020, it is expected that in addition to this comprehensive reduction, the central bank will probably implement another one to two times of reduction, a total of 1.0 percentage points to 1.5 percentage points this year. During this period, in order to increase the support for small and micro enterprises, the central bank may also implement two targeted reductions. Secondly, in order to reflect the increase of the counter cyclical adjustment of monetary policy, in 2020, the central bank will continue to use the quantitative tool of reducing the standard, and it is possible to continue the process of slightly reducing the MLF interest rate since November 5, 2019, "volume price integration" will be an important feature of the implementation of monetary policy this year.