On January 17, the people's Bank of China launched 700 billion yuan medium-term lending facility (MLF) operation and 100 billion yuan open market reverse repurchase operation. The bid winning interest rate of MLF operation and open market reverse repurchase operation decreased by 10 basis points. Specifically, the bid winning interest rate of 1-year MLF is 2.85%, and the bid winning interest rate of 7-day reverse repurchase is 2.1%. Industry insiders said that the "interest rate cut" is within the market expectation, and the 10 basis point reduction of policy tool interest rate is not small, which means that the counter cyclical regulation is increasing. Looking ahead, there is still room for RRR reduction, LPR is expected to continue to decline, and structural monetary policy tools will also play a greater role in guiding the flow of financial resources into key areas. Liang Si, a researcher at the Bank of China Research Institute, said that the 7-day reverse repo interest rate is the short-term policy interest rate and the 1-year MLF interest rate is the medium-term policy interest rate. The two together constitute China's policy interest rate system. Since April 2020, the 1-year MLF interest rate and 7-day reverse repo interest rate have remained at 2.95% and 2.2%, and the interest margin between them has remained at 75 basis points. Since then, they have remained stable for a long time. "After a lapse of many months, the reduction of policy tool interest rate means that the counter cyclical regulation continues to work." He said. Sheng song, Professor of China Europe International Business School and former director of the survey and Statistics Department of the people's Bank of China, told the economic information daily that the interest rate cut first reduced the capital cost of financial institutions, thus encouraging financial institutions to provide more and lower cost credit support to the real economy. Secondly, after LPR reform in 2019, real economy loans are priced according to LPR, which is formed by adding points on the basis of MLF interest rate. Therefore, the decline of MLF interest rate will probably drive the decline of LPR, so as to directly reduce the financing cost of the real economy and better support the "six stabilities" and "six guarantees". In the past, it was rare to cut interest rates to continue to guide the decline of LPR in the next month after the decline of one-year LPR. "The interest rate cut this month reflects the requirements of properly advancing the policy and organically combining cross cyclical and counter cyclical policies. The 10 basis point interest rate cut is not small compared with the first interest rate cut in the early stage of the epidemic, which is a reflection of increasing counter cyclical regulation." Wen bin, chief researcher of China Minsheng Bank, said. Looking forward to the future, Lou Feipeng, a researcher of China postal savings bank, told reporters that since 2021, China has successively implemented two standard cuts and guided the one-year LPR to be reduced by 5 basis points. Coupled with this interest rate cut, it should be said that monetary policy is actively making efforts to guide Finance to better serve the real economy. In terms of subsequent monetary policy operations, there is still room for RRR reduction, and there is also room for guiding the flow of financial resources into key areas through structural monetary policy tools. (outlook new era)