After a lapse of seven months, the medium - and short-term policy interest rates fell again. On August 15, the people's Bank of China carried out a 1-year medium-term loan facility (MLF) operation of 400 billion yuan and a 7-day open market reverse repurchase operation of 2 billion yuan. The bid winning interest rates were 2.75% and 2.00% respectively, both of which were 10 basis points lower than the previous operation. In the view of the insiders, the "unexpected interest rate reduction" is a timely response to the recent changes in the economic and financial situation, which reflects the strengthening of the implementation of the prudent monetary policy, helps to further guide the reduction of the financing cost of the real economy, expand domestic demand, and consolidate the good trend of economic recovery. Boost financing demand "since this round of interest rate increase by the Federal Reserve, China's interest rate reduction operation has entered the observation period. Recently, the people's Bank of China has also expressed concern about structural inflation, internal and external balance and other topics, which makes the market's expectation of the recent 'interest rate reduction' low." For this policy interest rate adjustment, Huatai Securities wrote in its review report. This view is quite representative. The operating interest rates of MLF and open market reverse repo fell for the second time since 2022. However, compared with the one in January, many market participants believe that this is an "unexpected interest rate cut", which is generally explained in the following three aspects: promoting the reduction of the financing cost of the real economy, expanding domestic demand, and consolidating the economic recovery. Zhou Maohua, Macro Analyst of the financial market department of Everbright Bank, said that the financial data in July showed that the year-on-year growth rate of M2 reached the highest level in recent years, but the new credit scale and the new social financing scale both dropped significantly, reflecting the current situation that the money supply is sufficient and the financing demand of the real economy is weak. Zhong Zhengsheng, chief economist of Ping An Securities, believes that since the beginning of this year, the data of social financing scale has "twists and turns", and the stability of credit growth is weak. In this context, it is still necessary to further stimulate loan demand through "interest rate reduction". In terms of promoting the reduction of financing costs, the most direct approach is to reduce the policy interest rate. At present, the market interest rate deviates much from the policy interest rate, and a moderate reduction of the policy interest rate can avoid the distortion of the interest rate system. Liang Si, a researcher at the Bank of China Research Institute, explained that under the control mode of the interest rate corridor, the market interest rate usually operates above the corresponding term policy interest rate. Recently, the main 7-day money market interest rate indicators have been continuously and significantly lower than the 7-day open market reverse repo rate, and the 1-year inter-bank deposit certificate interest rate has also been significantly lower than the 1-year MLF interest rate. The drop in policy interest rate has strengthened the resonance with the market interest rate. After the constraints from price and exchange rate were eased, the time window for discretionary monetary policy was reopened. Zhong Zhengsheng said that the year-on-year growth rates of CPI and PPI in July were both lower than the previous market expectations, and the year-on-year growth rate of core CPI declined; At the same time, overseas inflation showed signs of peaking, the market's expectation of the Federal Reserve's interest rate rise in September cooled, and the RMB exchange rate rose steadily. Wang Qing, chief Macro Analyst of Dongfang Jincheng, said that the interest rate cut further shows that China's current monetary policy regulation focuses on stable growth, and that domestic structural inflationary pressure and overseas monetary policy tightening do not constitute substantive obstacles. The LPR has a large probability to follow the decline. For the new one to be announced on August 22