Nancai fast comments: the results of interest rate conduction mechanism are significant, and future policy adjustment still has space

On September 20, the Division of the People's Bank of China published an article "Deeply Promoting the Market -based Reform of Interests".

The article first reviews the decision -making deployment of the Party Central Committee since the 19th National Congress of the Communist Party of China, the main process of the People's Bank of China deepening the market -oriented reform of interest rates, and the improvement of the results of the formation of market -oriented interest rate formation and conduction mechanism.

In terms of loan interest rate reform, in August 2019, the People's Bank of China promoted the reform of the loan market quotation interest rate (LPR) reform, and established a market -oriented quotation model that increased the loan interest rate on the basis of the interim borrowing convenience (MLF) interest rate. In terms of the reform of deposit interest rates, the People's Bank of China has continuously guided the market interest rate pricing and self -discipline mechanism to optimize the formation of deposit interest rates. In June 2021, the reference interest rate floating multiple of the deposit was changed to plus points. In April 2022, the deposit interest rate level refer to the bond market interest rate represented by 10 -year Treasury bond yields and the interest rate adjustment of loan market interest rates represented by one -year LPR.

In terms of the formation of market -oriented interest rate formation and conduction mechanism, it has formed a central bank policy interest rate system with open market operating interest rates as short -term policy interest rates, medium -term borrowing convenience rates as interim policy interest rates, and the interest rate corridor mechanism. Interest rate transmission mechanisms for national bond yield curve and deposit and loan interest rate conduction.

With the support of the above reforms, from January to September this year, the 10 -year Treasury yield center cumulatively declined for 20bps, and LPR more than one year and 5 years accumulated a total of 15bps and 35bps, respectively. The interest rate of corporate loans decreased from 4.57%in December 2021 to 4.05%in August 2022. After the state-owned bank and some joint-stock banks lowered the personal deposit interest rate in September this year, the personal deposit interest rate was reduced by 15-25bps in September from the beginning of the year, and the decline was basically the same as the changes in the asset side.

Although the main commercial banks have lowered personal deposit interest rates in September, the September LPR quotation, which was released on the 20th, did not reduce the September LPR quotation. The main reason is that the central bank has continued to do MLF this month, and the operating interest rate was the same as last month. In August, the economic and financial data showed that the economic prosperity has been in a warming trend month -on -month. The reduction of this deposit rate is more to reduce the cost of bank liabilities, alleviate the insufficient net interest margin of banks, and follow the conditions for subsequent banks to follow MLF to reduce LPR quotation and reduce the actual loan interest rate preparation conditions, and effectively reduce social financing costs.

In April, after the self -regulatory mechanism bank determined the deposit interest rate adjustment model, the deposit interest rate immediately lowered. On the last week of April (April 25th -May 1st), the average interest rate of new deposits of deposits in financial institutions in the country was 2.37%, a decrease of 10bps from the previous week. Compared with more mechanism guidance characteristics under the previous deposit interest rate, the main commercial bank reduction in September is a market response to the changes in policy interest rates and market conditions. The adjustment has achieved internal circulation, the central bank's monetary policy transmission is more smooth and effective, and the macro -control capacity of monetary policy has been strengthened. This is also the reason for the central bank's article to be released, affirming the market -oriented reform of interest rates.

Due to the deposit interest rate accounted for more than 60%of the bank's liabilities, after the decline in deposit interest rates this month, the pressure on the bank's net interest margin was significantly relieved. If the economy is not as good as expected in the future, there is still room for loan interest rate decline and LPR quotation. The central bank article also pointed out that the current regular deposit interest rate in my country is about 1%to 2%, and the loan interest rate is about 4%to 5%. The real interest rate is slightly lower than the potential actual economic growth rate. Excellent strategy. It is expected that subsequent central banks will continue to maintain the current level of liquidity and guide various interest rates to fluctuate reasonably. Once the economy needs monetary policy support, the central bank will quickly carry out policy reactions. By establishing a practical conduction mechanism, market interest rates are adjusted downward.

(The author is a researcher at the Financial Marketing Department of China Construction Bank)

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