On November 5, the central bank cut the one-year medium-term lending facility rate by 0.5 basis points.
On November 18, the central bank restarted the reverse repo operation, and the reverse repo rate was reduced by 5 basis points.
After 13 days, the central bank will cut interest rates again;! What signal?
The central bank cut the 7-day reverse repo rate to 2.5%
On November 18, the people's Bank of China announced that it had carried out 7-day reverse repo of 180 billion yuan in the form of interest rate bidding on that day, with the bid winning rate of 2.50%, down 5 BP compared with the previous one, which is the first time that the 7-day reverse repo rate has been lowered in more than four years.
However, it is also expected that the reverse repo rate will be cut this time. When the central bank cut the 1-year medium-term lending facility (MLF) rate by 5 basis points in early November, some analysts believed that the reverse repo rate would also be cut by the same points.
After the announcement of the good news, the yield of interbank cash bonds fell 4-5 basis points. The Shanghai Composite Index rose 0.62% to close at 2900.
What is reverse repo operation?
The so-called reverse repo operation refers to a way for the central bank to release liquidity in the open market. Generally speaking, it means that commercial banks pledge bonds to the central bank, while the central bank lends money to commercial banks.
Therefore, if the central bank lowers the interest rate of reverse repo, it will reduce the financing cost of commercial banks in the open market.
Since September, the central bank has cut three major interest rates in a row
From late September to the beginning of this month, the central bank lowered the quoted interest rate of the loan market, to the middle-term lending convenience interest rate, and then to yesterday, the central bank lowered the reverse repo rate of the open market operation. What does it mean that the central bank continuously lowered three major interest rates?
The last time the central bank conducted reverse repo was on October 25. Since then, the central bank has suspended capital investment through reverse repo.
After the Fed cut interest rates on October 31, the central bank did not act in the open market at the same time.
But then on November 5, the central bank cut the one-year medium-term lending facility interest rate by 0.5 basis points. After this cut of the reverse repo rate, the seven-day reverse repo rate returned to the level of last March.
Earlier on September 20, the quoted interest rate in the loan market was also cut by 5 basis points. These actions are called "interest rate cut" by the outside world;.
Recently, a series of monetary policy practices of the central bank have made the market see the strength of increasing counter cyclical regulation. The market expects that the latest loan market quotation rate this week will increase the probability of another reduction.
Fine monetary policy releases easing signal
What does it mean for the central bank to cut three major interest rates in a row? What kind of waves can the capital market set off?
For example, Guan Qingyou, President of Financial Research Institute:
It should be said that the central bank now believes that the steady growth status has been improved and the counter cyclical adjustment has been strengthened, which also releases the signal of marginal easing of monetary policy.
The central bank can effectively supplement the liquidity of market funds through reverse repo operation. After reducing the interest rate of reverse repo operation, it can guide the downward trend of short-term fund interest rate, thus reducing the cost of debt end of financial institutions, realizing the purpose of reducing the financing cost of real economy, and directly supporting the bottom economy through price-based monetary easing.
The downward reverse repo rate is positive to the capital market. The stock market has been affected. The bond market, which is subject to inflation in the early stage, has risen, and the space for monetary policy easing has opened up. However, it should be noted that the current operation of the central bank is to prevent the "flood". The monetary operation of the central bank is very delicate.
