As soon as the news that "the central bank turned in more than trillion yuan of profits" was released, it immediately became a hot topic in the market. Interpretation of the policy came one after another, many of which equated this move with the RRR reduction, saying that "the annual 1 trillion incremental base currency investment is equivalent to the 50bp RRR reduction". What's more, it is believed that "the effect of this action may be far better than the standard reduction". Can it be said that the RRR reduction previously expected by the market participants has really come in another form? The reporter learned from the interview that the profits handed over by the central bank are not equal to the reduction of the reserve requirement, but they have the effect of similar "reduction of the reserve requirement" - in terms of the effect of boosting the economy, the two are expected to "go the same way". The specific liquidity release effect of turned in profits still depends on many factors. This does not mean that the RRR window is closed. Insiders said that although the necessity of subsequent RRR reduction has been reduced, whether the RRR reduction is implemented still depends on the macroeconomic and financial operation situation. In addition, considering internal and external factors, the probability of interest rate reduction in the near future increases. It can achieve the effect of "quasi standard reduction", but it is not equivalent to standard reduction The announcement of the people's Bank of China shows that this year, the people's Bank of China will turn over the balance profits to the central government, with a total amount of more than 1 trillion yuan, which will be mainly used to offset tax rebates and increase transfer payments to local governments. As this process involves the release of base money and belongs to the expansion increment, many industry analysts believe that in terms of effect, the turned in profits and the overall reduction of reserve requirements are expected to achieve "the same goal by different paths". "After turning in profits and fiscal expenditure, the base currency will increase." CICC said that the scale of base currency investment brought by the profit of 1 trillion yuan (after fiscal expenditure) is equivalent to the increase of base currency brought by the reduction of reserve requirement by 50bp. From this perspective, the need for a comprehensive RRR reduction in the near future has declined. Zhang Yu, assistant director and chief Macro Analyst of Huachuang Securities Research Institute, believes that the turned in profits have the effect of "quasi RRR reduction" of 50bp. As long as this part of money is formed into the government's financial deposit and put in, it will form the expansion of the base currency. CICC believes that in terms of boosting the economy, the effect of re investment of turned in profits is much better than the same amount of RRR reduction, because it directly improves the private sector balance sheet and directly brings broad money investment. The RRR reduction is to release part of the locked base currency to commercial banks, which may not directly bring credit. But in fact, there are obvious differences between the two mechanisms. "Unlike the direct RRR reduction, which is usually implemented once or twice, the easing effect of the profits handed over by the central bank on the capital side is relatively limited in the short term. The RRR reduction will directly increase the long-term liquidity of banks and improve their lending capacity, but the profits handed over by the central bank have no such effect. It directly increases the ability of fiscal tax reduction (tax rebate) and fee reduction." Wang Qing, chief Macro Analyst of Dongfang Jincheng, said. The specific liquidity release effect of the turned in profits still depends on many factors. "As there is still a certain time difference between the profit of 1 trillion yuan and the financial expenditure, the liquidity conditions need to be further relaxed until the actual release of Financial deposits." CICC said. Zhang Yu said that this "quasi RRR reduction" is not a one-time release. At the same time, the real economy can feel "quasi RRR reduction" only when financial funds flow to enterprises and residents after use. In addition, the profits turned in this round limit the use of funds, so the liquidity release felt by the real economy may be less than 50bp. The necessity of RRR reduction is reduced, but the window is not closed In March, China's monetary policy has entered an important window observation period. Many analysts said that the "forward force" monetary policy needs to be strengthened. Timely and appropriate RRR reduction can meet and support the needs of credit expansion, further reduce social financing costs and effectively help achieve the goal of steady growth. After the "profits handed over by the central bank exceed trillion yuan", the market believes that the need for short-term RRR reduction is reduced. So, is it possible for the subsequent RRR reduction to land? "The profits handed over by the central bank have the effect of RRR reduction, which may reduce the necessity and frequency of direct RRR reduction in the future to a certain extent, but this does not mean that the RRR reduction window in the second quarter will be closed." Wang Qing said that whether to implement direct RRR reduction in the future mainly depends on the macroeconomic and financial operation situation. Wang Qing said that an important observation point is the upcoming macroeconomic data such as investment and consumption from January to February, as well as the financial data in February. Among them, we can focus on whether the growth rate of various loan balances in February can realize "from decline to rise". "To supplement the funding gap and provide medium and long-term incremental funds, RRR reduction is an option." Ming Ming, CO chief economist of CITIC Securities, believes that although the maturity pressure of medium-term lending facility (MLF) is low in the next quarter, there is still a liquidity gap caused by the peak tax period and the issuance of government bonds, which may become the trigger factor of RRR reduction. At present, the liquidity gap of the banking system is small, and the bank overstock rate is also down again. To further guide financial institutions to increase credit and reduce loan interest rates, on the one hand, we need to make up for the medium and long-term capital gap, on the other hand, we need to reduce the cost of liabilities. The probability of "interest rate cut" is expected to increase In addition to the RRR reduction, the policy interest rate "interest rate reduction" is also a policy option. Zhang Yu reminded the market to pay attention to the possibility of MLF "interest rate cut" on March 15. She believes that due to the year-on-year CPI data of the United States in February, the rate is likely to rise further than that in January this year. In the context of rising inflation, it is not ruled out that the Fed will curb inflation by continuously raising interest rates in the future. Therefore, on March 15, the people's Bank of China may "cut interest rates". On the one hand, it can demonstrate independence and boost internal confidence; On the other hand, it can also promote the decline of financing costs in the whole society and help accelerate the repair of "credit expansion". "Looking back, the current stock base currency level is not low. With the further release of the base currency at the end of the quarter, the probability of reducing the reserve requirement in the near future decreases. However, due to the repeated impact of overseas risks and epidemics, the financial market fluctuates greatly, the economic expectation is weak, and the probability of 'interest rate reduction' in the near future is increasing." Ni Jun, chief analyst of Guangfa Securities bank, said. Wang Yiming, member of the National Committee of the Chinese people's Political Consultative Conference and former deputy director of the development research center of the State Council, said in his speech at the second plenary meeting of the fifth session of the 13th CPPCC National Committee that the prudent monetary policy is more accurate, the implementation of reserve and interest rate cuts, the increase of inclusive small and micro loans, the rapid growth of medium and long-term loans in the manufacturing industry, and the steady decline of comprehensive financing costs of enterprises. "The reduction of reserve requirements and interest rates needs to comprehensively consider the changes of the economic situation. On the whole, the probability of occurrence in the first quarter is small, and it may occur in the third and fourth quarters." Liang Si, a researcher at the Bank of China Research Institute, said that it is still possible to reduce the reserve requirement and interest rate, but it is not necessary to continuously reduce the reserve requirement and interest rate. The best way is to "watch while walking" to see the actual implementation effect of the policy. (Xinhua News Agency)