On April 1st, the central bank launched a 7-day reverse repurchase operation of 2 billion yuan through interest rate bidding to maintain reasonable and sufficient liquidity in the banking system, with the operating interest rate remaining unchanged at 1.8%. Given that there was a 50 billion yuan reverse repurchase due on the same day, the central bank's open market achieved a net withdrawal of 48 billion yuan. Looking back at last week (March 25th to March 29th, the same below), the central bank carried out a total of 850 billion yuan of reverse repurchase, achieving a net investment of 828 billion yuan after hedging against maturity to maintain stable liquidity at the end of the quarter. The market funding interest rate has also fallen. According to data from the National Interbank Funding Center, the average DR007 (7-day weighted average interest rate for interbank market deposit institutions) was 1.98% last week. Among them, 2.0147% was reported on March 27th and 2.0124% was reported on March 29th, respectively, which were the highest and second highest levels within the month. As of 16:30 on April 1st, DR007 reported 1.8734%. Wang Qing, the chief macro analyst of Oriental Jincheng, told the Securities Daily that April was a "small month" of fiscal expenditure. However, after a relatively slow down of treasury bond fund allocation and local government bond issuance in the first quarter, the issuance of local government bonds in April will be large, and net financing is expected to increase significantly. In addition, under the requirement of "balanced credit allocation", the scale of credit allocation is expected to achieve a year-on-year increase in April. These factors may have a certain impact on the capital market, and it is expected that market liquidity will remain tight in April, and the average DR007 will continue to operate above short-term policy rates. It is foreseeable that the central bank will continue to maintain reasonable and sufficient liquidity through open market operations and other means. It is worth noting that Vice Governor of the People's Bank of China, Xuan Changneng, stated at a press conference held by the State Council Information Office on March 21: "China's monetary policy has sufficient policy space and rich tool reserves, and there is still room for a decrease in the statutory reserve requirement ratio." So, will there be a short-term reduction in reserve requirements or interest rates? "The macro data in the first two months of this year exceeded market expectations, and the official manufacturing PMI index rebounded significantly in March. This means that the GDP growth rate in the first quarter is expected to reach around 5.0%, higher than expected. The market quoted interest rates for loans with a maturity of more than 5 years and the comprehensive reserve requirement reduction also fell in February. Therefore, the probability of interest rate and reserve requirement reduction in the short term is not high," said Wang Qing. However, Wang Qing believes that stable growth measures such as large-scale equipment updates and the exchange of old for new consumer goods will be solidly promoted in the future. Real estate support policies still need to be further strengthened, and the possibility of implementing interest rate and reserve requirement cuts in the middle of the year cannot be ruled out. (Lai Xin She)
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