2023-09-15 00:09:45
Xinhua News Agency, Beijing, September 14th, Title: News Analysis: The second reserve requirement ratio cut this year releases positive signals to help the economy rebound and improve.
Xinhua News Agency reporter Wu Yu
The People’s Bank of China announced a 0.25 percentage point RRR cut on the 14th. This is the second RRR cut this year and is expected to release more than 500 billion yuan of medium- and long-term liquidity. Experts said that this RRR cut will help increase long-term stable funding sources for financial institutions, further increase capital investment in the real economy, and consolidate the economic recovery.
The People’s Bank of China announced that day that it has decided to lower the deposit reserve ratio of financial institutions by 0.25 percentage points on September 15, 2023 (excluding financial institutions that have implemented a 5% deposit reserve ratio). This is the second RRR cut this year. The first RRR cut this year was implemented in March. The two RRR cuts reduced the deposit reserve ratio of financial institutions by 0.5 percentage points and released more than one trillion yuan in long-term funds. After this reduction, the weighted average deposit reserve ratio of financial institutions will be approximately 7.4%.
“Reducing the reserve requirement ratio at this time will help consolidate the foundation for economic recovery and is very necessary.” Dong Ximiao, chief researcher of China Merchants Union, believes that September is the end of the quarter, and regulatory assessments such as liquidity indicators will lead to an increase in the liquidity needs of financial institutions. The central bank chooses Taking timely measures at this point will help alleviate the liquidity pressure on financial institutions.
This 0.25 percentage point RRR cut does not include financial institutions that already apply the 5% deposit reserve ratio. Many market participants believe that the total amount of liquidity released by the RRR cut is moderate and not a “flood”. It can not only alleviate short-term liquidity needs, but also continue to supplement medium- and long-term liquidity needs such as credit growth and cash injection in the future period.
In August, my country’s RMB loans increased by 1.36 trillion yuan, an increase of more than one trillion yuan from July, and financial support for the real economy continued unabated. Wen Bin, chief economist of China Minsheng Bank, believes that this RRR cut will help increase the financial stability of the banking system and continue to effectively meet the liquidity needs of financial institutions to increase the investment of funds in urgently needed areas. In the future, it is still expected that money and credit will maintain steady and rapid growth.
Since the beginning of this year, financing costs for the real economy have dropped significantly. In the first eight months, corporate loan interest rates have dropped to historical lows since statistics were collected. In this context, driving loan interest rates downward requires further reducing bank funding costs.
“The net interest margin of my country’s banks is further under pressure. It is necessary to optimize the bank’s capital structure, reduce capital costs, and enhance the soundness of operations and risk resistance through lowering the reserve requirement, so as to expand space for further reducing the financing costs of enterprises and residents.” Wen Bin said.
At present, my country’s economic operation continues to recover, endogenous power continues to strengthen, and social expectations continue to improve. In August, the national consumer price index (CPI) turned from negative to positive year-on-year, and the national industrial producer price index (PPI) also continued its positive trend. Industry insiders believe that this RRR cut continues to enhance the potential of financial support to expand domestic demand, and is conducive to further leveraging the early driving role of financial resources and supporting the continued moderate recovery of inflation indicators.
“The RRR cut further sends a strong policy signal to the market, and the rich policy tools will further help the economy rebound and boost market confidence and expectations.” Dong Ximiao said that following the loan market quotation rate (LPR) dropped twice during the year, a comprehensive After optimizing housing credit policies and other measures, the central bank once once more implemented the required reserve requirement ratio cut, which will continue to reflect the policy support effect and enhance the endogenous driving force for economic recovery.
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