Opinion leader moderate, Zhang Yun
On 15 May, in order to preserve the liquidity of the banking system, the Bank carried out a total of 125 billion yuan renminbi-year MLF operation and a seven-day open market repurchase operation, with a median interest rate of 2.75 per cent and 2.0 per cent, respectively, fully meeting the needs of financial institutions. On that date, 4 billion yuan renminbi was due and a total of 10 billion yuan MLF expired in May, with 16 May. This month, MLF achieved a “minimum superficial price” renewal, with market expectations of interest.
In May, MLF achieved a “minimum excess” with multiple factors.
Since May, funding has been stretched to the centre of interest rates, influenced by such factors as ease of liquidity, slowing down of bank lending and increased melting of capital funds. Last week, R001 operated between 1.25 and 1.52 per cent, DR007 operated between 1.77 and 1.84 per cent and DR007 back to 1.81 per cent, well below the policy interest rate level.
Reimbursement operations in recent central banks have been maintained at a lower level, as well as the need to renew MLF.
Figure 1: hub of interest rates since May
Source: Wind
In April, a new yuan renminbi was added to the credit of $718.8 million, which was a clear return from the quarter. The year-to-February due date for the same-life balance was $23,270 million, and April-May it was $19,21 million, respectively, and the supply pressure for short-term co-payments decreased over a quarter.
The stabilization of the credit tempo and the decline in the amount due to the same deposit sheets have led to reduced pressure on banks to misalignment, increased interest rates on deposit in the near future, prompted a windfall in the interest rate on deposit sheets, reduced by 2.43 per cent on 12 May, and a widening of the profit margin from MLF to 32bp, which has also reduced the need for banks to renew MLF.
Figure 2: Decrease in co-stock due in April-5
Source: Wind
Figure 3: Increases in currency loans and loan balances by month
Source: Central Bank, Wind
Current institutional leverage has increased enthusiastically, with an average of $785 million per day for inter-bank backup last week, an increase of $237 million over the previous week, maintaining a higher level of institutional leverage. High leverage can increase the vulnerability of inter-bank markets to finance, which can lead to significant fluctuations in the interest rates of funds once future liquidity becomes marginal. To this end, MLF’s microgrowth in May will allow the market to be freed from expectations that continue to be reasonably well funded, as well as to leverage institutions to maintain a stable functioning of the market.
Figure 4
Source: Central Bank, Wind
In general, tax collection can have a certain impact on mobility, thus affecting the financial position, while in May it was a traditional major contributory month. In addition to normal monthly payments of taxes such as value-added tax, income tax, consumption tax, resource tax, etc., a prior year’s annual income tax collection will be undertaken, which will compensate for the previous year’s income tax. The financial impact of the May tax will therefore be more pronounced. This week, 18 is the closing date of the tax, 19 and 22 days are pre-tax contributions, with more financial disruptions in days before and after the payment of the tax. Thus, in May, MLF’s small overstretch contributed to reducing financial disturbances during the tax period and smoothing interest rate fluctuations.
In addition, MLF’s small overstretch has also released the Bank’s signal of a continuation of a sound, slightly less biased policy that will help to induce financial institutions to continue to increase their support for the real economy and stabilize market expectations.
In May, the MLF interest rate remained unchanged, and the market’s expectations for interest reduction were vacated.
Recent indicators of production, demand, prices, credit, etc. have been weak, showing that domestic demand is still inadequate and that economic rehabilitation is slow. As in April, the manufacturing of the PMI ring fell by 2.7 percentage points to 49.2 per cent last month, with a return of less than the bath line; in April, the CPI increased by 0.1 per cent, a fall of 0.6 percentage points in the previous month, three months in succession, with a new decline since March 2021; and in April, additional credit and social melting of $718.8 million and yuan renminbi respectively.
In combination with past experience, however, policy precipitation has occurred at a time when PMI has continued to fall below 50 per cent, while PMI has now returned to less than 50 per cent in April; and at the same time, despite the weakening of the credit margin in April, the interest rate on paper has not reached the level of zero interest that was rare last year, and the extension of long-term lending in business, with a relatively high share of credit in credit, has also contributed to the stability of subsequent credit. To this end, the possibility of a short-term central bank is still low, and it is necessary to continue to observe economic trends. If the follow-up economic ring continues to be weak and the credit crunch is weak, the market’s expectation of relieving the central bank will continue to rise, without excluding the possibility of the central bank’s downside.
Last year’s interest rate was fast down, with the regularization of deposits increasing the costs of the economy, leaving the net interest deficit of commercial banks narrowed to 1.91 per cent historically low. Since the year, competitive bidding and physical financing needs have yet to be repaired, overall credit interest rates have continued and banking performance has been further strained. In addition, when some enterprises receive low interest rate loans, they are converted to deposit or purchase, and loans are not effectively translated into investment production. There is still a need for revamping in the main confidence, and a reshuffling of interest may exacerbate financial and gloves. The current regulation actively leads to lower interest rates on deposits and is also a real need to facilitate financial flows to the real economy of the entity.
The impact of fiscal policies is expected to be better in the face of the current fragmentation of economic structures and the persistence of inadequate internal dynamics. In a low interest rate environment, the precipitation is more the confidence of market agents, the interest rate in the currency capital market is likely to remain low, the signal is likely to be greater than actual, and in March the elderator publicly stated that the current level of real interest rates is more appropriate, and the time for precipitation is still waiting.
The current major developed economies are still in the interest-adjusted cycle, with the United States CPI increasing by 4.9 per cent in April, while falling for the tenth consecutive month, still far from the 2 per cent inflation target; and the United States employment data remain robust and beyond expectations, increasing the number of changes in the Associated Pensions plus route. Follow-up, U.S. reserves will maintain high policy interest rates over a longer period, even if they are substantially slowed down or suspended.