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China's central bank announced interest rate cuts RRR!
Release time:2015-08-27 10:38:45
On Tuesday evening, the Chinese central bank announced double down, down financial institutions RMB benchmark lending and deposit interest rates 0.25 percentage points, down financial institutions RMB deposit reserve ratio by 0.5 percentage points. This is China's central bank since last November the fifth interest rate cut since the third round this year, the RRR.
Meanwhile, the central bank decided to release more than one year (excluding one year) fixed deposit interest rate floating ceiling, demand deposits and time deposits of one year or less floating interest rate ceiling unchanged.
People's Bank of China, from August 26, 2015, down financial institutions RMB benchmark lending and deposit interest rates, in order to further reduce corporate financing costs. Among them, one-year benchmark lending rate by 0.25 percentage point to 4.6%; year benchmark deposit rate by 0.25 percentage point to 1.75%; all other grades of loans and deposit benchmark interest rate, adjusted individual housing provident fund deposit and lending rates. Meanwhile, the release of more than one year (excluding one year) fixed deposit interest rate floating ceiling, demand deposits and time deposits of one year or less floating interest rate ceiling unchanged.
Since September 6, 2015, down financial institutions RMB deposit reserve ratio by 0.5 percentage points, in order to maintain reasonably adequate liquidity in the banking system, guide steady moderate growth of money and credit. Meanwhile, to further enhance the financial institutions to support the "three rural" and the ability of small and micro businesses, additional lowering county rural commercial banks, rural cooperative banks, rural credit cooperatives and rural banks and other rural financial institutions reserve ratio by 0.5 percentage points. Additional reduction of financial leasing companies and auto finance companies reserve ratio three percentage points, to encourage it to play a good role in the expansion of consumption.
The central bank in answering reporters' questions in the subsequent mention, due to the global financial market's recent greater volatility, therefore, China needs to be more flexibility in the use of monetary policy tools to create a favorable environment for monetary and financial adjustment of economic structure and economic stable and healthy development.
In introducing specific reasons, the central bank said the rate cut to reduce the main purpose is to promote the social cost of financing to support the sustained and healthy development of the real economy. "Although the past two months, CPI rose slightly, but mainly affected by structural factors such as rising pork prices significantly, the overall price level is still at historically low levels, but also for re-use price tools to further drive down the cost of providing social financing conditions."
About RRR, the central bank said, it was mainly based on changes in the banking system liquidity, adequate long-term liquidity, in order to maintain adequate liquidity and reasonable, and promote stable and healthy economic development.
The central bank specifically mentioned, "the foreign exchange market in the process of reaching equilibrium, can also cause fluctuations in liquidity, the corresponding need to make up the resulting liquidity gap, lower the deposit reserve ratio may play such a role."
Recently many analysts have expected the central bank will drop quasi 50 basis points, to hedge funds outflow caused by devaluation. Minsheng Securities Research Institute, Executive Director of Friends of pipe clear expected July August trillion foreign exchange outflows could reach a preliminary estimate of this RRR RRR 50BP 50BP and orientation put liquidity size of about 6000-7000 million plus Previously net MLF and open market operations put in, basically to hedge foreign exchange reduced amount. Therefore, the RRR release liquidity scale, base currency Hedge gap intent more clearly, did not take the initiative to release excess liquidity.
However, JP Morgan chief China economist Zhu Haibin said that China's central bank at the same time lowering the standard of minus interest rates than expected, which will increase the devaluation pressure on the rest of this year is expected to China's capital outflows will be intensified.
In addition, it is worth noting that the statement did not mention China's central bank to continue to implement a prudent monetary policy. (Click here to see answered reporters' questions)
August 11 the central bank announced to improve the RMB exchange rate quotes, the central parity against the interbank foreign exchange market will reference the closing rate. The same day the central parity reduced sharply more than 1,000 points, its biggest drop in history. As of today's close, the onshore renminbi cumulative depreciation of 3.16%.
In addition to devaluation, recently A shares hit consecutive setback. Yesterday, the stock index plunged 8.49 percent, down a record in February 2007 to the maximum. Today, A shares continued shrinkage down, stock index fell 3,000 points mark, fell 7.63 percent, over the past four trading days, the cumulative decline widened to 22%, for the 24 largest decline since 1996.
The central bank "double down" before the Lujiazui investor sentiment survey and Wall Street knowledge salon co-sponsored show in the global market turmoil, the next A-share plunge in the background, lose confidence in the short term, the proportion of A-share investors have up to 90% the next few weeks on the sidelines of the proportion of investors and therefore also accounted for 62.2%. But the good news is that in the long run, there are still more than half of investors are optimistic about the A shares.
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