The "land volume" open market operation is still ongoing. On July 13, the people's Bank of China announced that in order to maintain the reasonable and abundant liquidity of the banking system, it carried out a 3billion yuan reverse repurchase operation by means of interest rate bidding on the same day, with a period of 7 days, and the bid winning interest rate of 2.10%, unchanged from the previous period. Since July, in addition to the 10 billion yuan reverse repo operation carried out by the central bank on July 1, this has been the reduction of the reverse repo of only 3 billion yuan per day for eight consecutive working days, the lowest operation scale since January last year, and the longest duration of the reduction operation. The operation scale of 3billion yuan is very small, so it is called "land volume" by the market. Previously, at the turn of the end of June and the end of the half year, in order to maintain the stability of liquidity at the end of the half year, the central bank repeatedly carried out reverse repo operations at the level of 100 billion yuan. In the week from July 4 to 8, the maturity of the related reverse repurchase was 400billion yuan. Under the continuous reverse repurchase operation of 3billion yuan, the net withdrawal scale of the week reached 385billion yuan. Why do you do this? Zhoumaohua, a researcher in the financial market department of Everbright Bank, believes that in order to cope with the time point at the end of the half year, the central bank has successively increased the net investment of funds. After the critical time point, the willingness of financial institutions to lend out has further increased. In addition, the issuance of special bonds has ended, and the market liquidity is relatively loose. From the recent market performance, the market interest rate fell rapidly after the end of half a year, and the market interest rate deviated far from the policy interest rate. Recently, the central bank operated flexibly through the open market, mainly to avoid excessive easing of funds and rapid decline of interest rates, which caused potential market arbitrage and leverage problems. "The central bank may continue to maintain a small-scale reverse repo operation, so that the market interest rate returns to the operation near the policy interest rate. From the trend, the central bank will continue to flexibly hedge short-term capital disturbance factors through reverse repo, medium-term lending facility (MLF) and other tools to ensure that liquidity remains reasonably abundant." Zhou Maohua said. It is worth noting that although the central bank recovers liquidity through reverse repo shrinkage, the current capital interest rate remains at a low level. On July 12, the Shanghai interbank offered rate (Shibor) fell 1.2 basis points overnight to 1.211%; Shibor fell 0.6 basis points to 1.621% in seven days. From the performance of repo interest rate, as of 17:00 on the 12th, the weighted average interest rate of dr007 (inter-bank 7-day pledge repo) fell to 1.5399%, lower than the policy interest rate. Since last year, the 10 billion yuan reverse repurchase has become the normal operation of the central bank's open market. Although the current inter-bank market funds continued to be loose as a whole, the central bank reduced the scale of reverse repo operations from 10billion yuan to 3billion yuan, which still made the market worried about the possibility of tightening liquidity in the future, and also led to market speculation about the trend of monetary policy. In this regard, industry insiders said that the reduction of reverse repo by the central bank does not represent a shift in monetary policy. The current dr007 interest rate is significantly lower than the policy interest rate by nearly 50 basis points, and the dr001 interest rate is lower to 1.2%. The central bank may deliberately guide the market interest rate to return to the policy interest rate level. Therefore, the low volume reverse repo operation may not be a signal for the central bank to start monetary tightening. Mingming, chief economist of CITIC Securities, said that the central bank also carried out bulk reverse repo operations in January 2021, and then the capital surface converged rapidly, and the capital interest rate returned to operate near the policy interest rate. The current capital environment is similar to that in 2021, but the fundamental environment is different. "The current economy is gradually recovering from the epidemic, and the endogenous growth momentum is still being repaired. The drastic adjustment at the beginning of 2021 is not suitable for the current economy and market. It is expected that the fine-tuning of monetary policy and the return of capital interest rate to policy interest rate will be relatively flat." Mingming further analyzed and said. In order to guide market interest rates to fluctuate around policy interest rates, the central bank has established the practice of daily open market operations. As the central bank emphasized in the report on the implementation of China's monetary policy in the first quarter of 2021, "when observing the central bank's open market operation, the market should focus on the open market operation interest rate, medium-term lending convenience interest rate and other policy interest rates, as well as the operation of the market benchmark interest rate over a period of time, rather than paying too much attention to the number of central bank operations, so as to avoid excessive interpretation of the orientation of monetary policy". It can be seen that the correct way to observe the policy signal of the central bank through open market operation is to observe the change of price, not the change of volume. This time, the central bank reduced the amount of reverse repurchase to 3billion yuan, but the bid winning interest rate remained unchanged at 2.1%, indicating that the signal of monetary policy adjustment did not appear. The macro team of China Merchants Securities Research and Development Center believes that even in terms of volume, the net amount of reverse repo during the cross quarter period this year is significantly higher than that of the same period last year (from June 20 to July 5, the central bank's reverse repo increased by nearly 100 billion yuan year-on-year). Recently, Yi Gang, the governor of the central bank, also made it clear that "monetary policy will continue to work from the aggregate to support economic recovery", which shows that the orientation of monetary policy has not changed. As for the follow-up trend of monetary policy, GF Securities Research Report shows that the RMB 3billion reverse repurchase operation of the central bank does not represent the shift of monetary policy. Generally, monetary policy will have a certain stability and continuity, and there will be no drastic changes in the short term, mainly for expectation management. (Xinhua News Agency)