According to the website of the People's Bank of China on June 28, the regular meeting of the Monetary Policy Committee of the People's Bank of China in the second quarter of 2024 was held in Beijing recently. The meeting pointed out that it is necessary to intensify the implementation of the monetary policy that has been introduced. Maintain reasonable and abundant liquidity, guide the reasonable growth and balanced distribution of credit, and keep the scale of social financing and money supply in line with the expected targets of economic growth and price levels. Fully understand the new changes in the relationship between supply and demand in the real estate market, conform to the new expectations of the people for high-quality housing, and strive to promote the implementation of the financial policies and measures that have been introduced to achieve results, and promote the steady and healthy development of the real estate market.
Quick Takeaways:
It is necessary to intensify the implementation of the monetary policy that has been introduced
Maintain the basic stability of the RMB exchange rate at a reasonable and balanced level
Promote the steady and healthy development of the real estate market
Increase financial support for large-scale equipment renewal and trade-in of consumer goods
Guide financial institutions to increase medium and long-term loans for the manufacturing industry with market demand
Increase financial support for the "market + security" housing supply system
Implement financial policy measures to promote the healthy development of the platform economy
Maintain the basic stability of the RMB exchange rate at a reasonable and balanced level
The meeting held that it is necessary to intensify the implementation of the monetary policy that has been introduced. Maintain reasonable and abundant liquidity, guide the reasonable growth and balanced distribution of credit, and keep the scale of social financing and money supply in line with the expected targets of economic growth and price levels. Promote a moderate recovery in prices and keep prices at a reasonable level. We will improve the formation and transmission mechanism of market-oriented interest rates, enrich the monetary policy toolbox, give full play to the guiding role of the central bank's policy interest rates, release the effectiveness of the reform of the loan market prime interest rate and the market-oriented adjustment mechanism of deposit interest rates, and promote the steady decline of corporate financing and household credit costs.
At the same time, in the process of economic recovery, it is also necessary to pay attention to the changes in long-term yields. Smooth the monetary policy transmission mechanism and improve the efficiency of capital use. Maintain the basic stability of the RMB exchange rate at a reasonable and balanced level, implement comprehensive policies, correct deviations, stabilize expectations, resolutely correct pro-cyclical behavior, prevent the formation of unilateral consensus expectations and self-reinforcement, and resolutely guard against the risk of exchange rate overshoot.
Pang Ming, chief economist of Jones Lang LaSalle Greater China, said that in terms of aggregate, the People's Bank of China will strive to keep the liquidity of the banking system at a reasonable level, keep money and credit matching with actual demand, and at the same time insist on not engaging in "flood irrigation"; In terms of price, we should guide commercial banks to make profits to the real economy, and at the same time, we should also realize the steady operation of banks themselves, support banks to replenish capital, guide the cost of bank liabilities to decline, and enhance the sustainability of banks serving the real economy.
In terms of exchange rate, industry insiders said that although there is uncertainty about the future trend of the RMB exchange rate, the adequacy of the foreign exchange market policy toolbox and the resolute attitude of the policy level to stabilize the RMB exchange rate will be conducive to the basic stability of the RMB exchange rate at a reasonable and balanced level.
In the third quarter, it is expected that the RRR and interest rates will be cut, and the deposit rate may be lowered
In terms of monetary policy orientation, the regular meeting continued to emphasize "paying more attention to counter-cyclical adjustment", "keeping the scale of social financing and money supply in line with the expected targets of economic growth and price levels", "promoting a moderate recovery in prices", and "promoting a steady and moderate decline in corporate financing and household credit costs", which was exactly the same as in the previous quarter.
In terms of follow-up policy outlook, a number of industry experts said that the window for interest rate cuts and RRR cuts is expected to open in the third quarter, and monetary policy will continue to work hard in the direction of stable growth.
In terms of RRR cuts, the banking system has been in a state of abundance recently, and Oriental Jincheng macro analysts believe that it is possible to implement another RRR cut in the third quarter to encourage banks and other financial institutions to actively participate in local debt risk resolution through debt swaps and other means. In terms of interest rate cuts, considering that the price recovery in the second half of the year is limited, the role of interest rate cuts is irreplaceable, and the urgency of interest rate cuts is higher than that of RRR cuts.
Zhou Maohua believes that in combination with the internal and external situation, it is expected that priority will be given to RRR cuts and structural tools in the future, and financial institutions will be guided to tap the potential of market-oriented interest rate reforms, maintain reasonable and abundant liquidity, reasonably reduce investment and consumer financing costs, and promote effective demand to accelerate recovery.
The meeting pointed out that it is necessary to improve the formation and transmission mechanism of market-oriented interest rates, enrich the monetary policy toolbox, give full play to the guiding role of the central bank's policy interest rate, release the effectiveness of the reform of the loan market prime interest rate and the market-oriented adjustment mechanism of the deposit interest rate, and promote the steady decline of corporate financing and household credit costs.
Combined with the recent statement of the central bank "diluting the policy interest rate color of other monetary policy tool interest rates" and "reforming and improving the LPR", as well as the net interest margin of banks is significantly lower than the "warning level", Oriental Jincheng macro analysts believe that it is not ruled out that the MLF operating interest rate in the third quarter will not move, and the central bank will directly guide the LPR quotation to be lowered by a large margin while lowering the 7-day reverse repo operation interest rate. In addition, in the second half of the year, supervision may lead to a significant reduction in deposit interest rates.
Promote the steady and healthy development of the real estate market
The meeting pointed out that it is necessary to deepen the structural reform of the financial supply side and build an institutional mechanism for finance to effectively support the real economy. We will guide large banks to play their role as the main force in financial services for the real economy, promote small and medium-sized banks to focus on their main responsibilities and main businesses, support banks in replenishing capital, and jointly maintain the stable development of the financial market. We will do a good job in science and technology finance, green finance, inclusive finance, pension finance, and digital finance, continue to increase support for major strategies, key areas and weak links, and promote the acceleration of the development of new quality productivity. Effectively implement the various existing structural monetary policy tools, and promote the implementation and effectiveness of newly established tools such as re-lending for scientific and technological innovation and technological transformation, and re-lending for affordable housing. Increase financial support for large-scale equipment renewal and trade-in of consumer goods. Comprehensive policies to support coordinated regional development. Implement the action plan to increase support for the financing of science and technology enterprises, guide financial institutions to increase medium and long-term loans for the manufacturing industry with market demand, and support the acceleration of the construction of a modern industrial system. Adhere to the "two unswerving" and continue to do a good job in financial services to support the development and growth of the private economy.
The meeting also pointed out that it is necessary to fully understand the new changes in the relationship between supply and demand in the real estate market, conform to the new expectations of the people for high-quality housing, and strive to promote the implementation of the financial policies and measures that have been introduced to promote the steady and healthy development of the real estate market. Increase financial support for the "market + security" housing supply system, and promote the acceleration of the construction of a new model of real estate development. Implement financial policy measures to promote the healthy development of the platform economy. Earnestly promote high-level two-way financial opening-up, and improve economic and financial management capabilities and risk prevention and control capabilities under the conditions of opening-up.
Market participants said that the current real estate market has frequent favorable policies, and the follow-up superposition effect will gradually appear. Catalyzed by favorable policies, the vitality of the real estate market is expected to increase, and the overall market confidence is expected to stabilize.
A little more news
The central bank and other seven departments jointly issued! Do a solid job in science and technology finance
Seven departments, including the People's Bank of China, the Ministry of Science and Technology, the National Development and Reform Commission, the Ministry of Industry and Information Technology, the State Administration of Financial Regulation, the China Securities Regulatory Commission, and the State Administration of Foreign Exchange, recently jointly issued the Work Plan on Doing a Solid Job in Science and Technology Finance (hereinafter referred to as the Work Plan).
Quick Takeaways:
1. Establish a green channel for the issuance of bonds by science and technology enterprises, and promote the bond issuance and financing of science and technology enterprises from the aspects of financing docking, credit enhancement, and rating.
2. Strengthen the functions of serving scientific and technological innovation such as stocks, the New Third Board, and regional equity markets, and strengthen policy support for cross-border financing of technology-based enterprises.
3. Focus on small and medium-sized science and technology enterprises, improve credit and insurance products that adapt to the characteristics of science and technology enterprises in the start-up and growth stages, further promote regional equity market innovation pilots, and enrich the sources of funds and exit channels for venture capital funds.
4. Create a science and technology financial ecosystem, encourage all localities to form science and technology finance alliances, support exchanges and cooperation between various financial institutions and science and technology intermediary service organizations, and provide science and technology enterprises with diversified relay financial services of "angel investment, venture capital, private equity investment, bank loans, capital market financing".
5. Optimize the incentive and guidance policy system, improve policy tools such as re-lending for scientific and technological innovation and technological transformation, re-lending for small and medium-sized enterprises, and special financial bonds for scientific and technological innovation, establish a mechanism for evaluating the effect of scientific and technological financial services, and fully mobilize the enthusiasm of financial institutions.
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