The Ru: The Tight Monetary Policy Should Be Maintained, &Nbsp Should Be Added To The Second Half Of The Year, And The Interest Rate Should Be Added 1-2 Times In The Second Half Of The Year

In the case of the possibility of the launch of the third quantitative easing policy in the US (QE3), Lu Zheng commissar, chief economist of Industrial Bank, believes that China's future policy adjustment should adhere to the principle of "giving priority to myself".

He expects to raise interest rates 1-2 times during the year and raise the deposit reserve ratio by 1-2 times.

China Securities Journal: how big is the US sovereign credit rating incident?

Lu political commissar: Standard & Poor's lowered the long-term sovereign debt rating of the United States from AAA to AA+.

For the first time in more than 100 years, the US debt has lost its highest rating.

The collapse of A shares is directly related to this.

S & P immediately lowered the credit rating outlook of 5 insurance companies including Buffett, Berkshire, and the rating of "two houses", on the grounds that these companies or their holdings were closely related to the US financial position.

Considering that there are many other potential entities that are in line with this logic, we can not predict whether more ratings will be downgraded in the future.

As the most powerful country in the world, the United States is unable to maintain its AAA rating. So take a look back at the British AAA, France AAA, Germany AAA, Japan AA-, Italy A+ rating is reasonable?

In May 31st, Moodie also warned of Japan's rating.

If Japan's economy does not exceed expectations in the future, I'm afraid that Japan's rating will be downgraded to the critical level of investment grade (BBB) or non investment grade.

If a series of such incidents occurs, financial markets will not be able to quickly stabilize.

Therefore, it is too early to say that the US sovereign credit rating is over.

China Securities Journal: how big is the possibility of QE3 in the US?

Lu political commissar: unless the US economy improves unexpectedly in the three or four quarter, the possibility of launching QE3 in the future is on the rise.

The latest statement of the Fed's Conference on interest rates suggests that the economic recovery is weaker than expected and that it will maintain ultra-low interest rates until 2013.

The Fed is ready to launch the QE3 and is waiting for the right political atmosphere to emerge.

The predictable nature of China's policy

China Securities Journal: in addition to the A share crash, what are the impact of the US sovereign credit rating incident on China?

Lu commissar: it makes China's policy more predictable, or delays China's policy adjustment.

Before the stabilization of the international financial market, China should maintain a wait-and-see attitude.

China Securities Journal: the US executes QE2. What kind of monetary policy has China adopted to hedge its influence?

Lu Zheng commissar: in the first half of the year, China raised the deposit reserve rate for the 6 time, totally freezing about 2 trillion and 250 billion yuan.

Such a big increase is largely aimed at hedging rapidly increasing foreign exchange reserves.

But at the same time, we should also note that the central bank is implementing tight monetary policy this year.

If there is no QE2 in the US, the rate of deposit reserve rate increase may be lower, but the liquidity of banks will still be relatively tight. This is the inevitable result of the macro-control policy turning to control the monetary conditions generated by inflation.

In addition, it also includes explicit or implicit credit limit regulation, as well as capital adequacy ratio, loan to deposit ratio and other regulatory policies.

In the second half of the year

China Securities Journal: if QE3 is implemented, how will China's monetary policy be adjusted?

Lu commissar: foreign countries continue to be relaxed, and domestic should be more robust.

From the perspective of historical experience, we should adhere to the principle of "giving priority to myself" in the future monetary policy adjustment.

That is to say, regardless of whether the US implements QE3, China should see clearly the current situation: under the pressure of inflation, bank deposits flow out and look for exports everywhere, so long as the things that can be bought and stored easily, there is no price inflation.

Therefore, the biggest challenge of the current macroeconomic policy is how to effectively curb excessive speculation without hurting the real economy.

It is suggested that if inflation continues to rise and the inflation expectations move upward, it is still necessary to raise interest rates to effectively guide market expectations; if future international capital inflows are heavy, it is still necessary to strengthen liquidity management.

China Securities Daily: in addition to the interest rate and accuracy you have been emphasizing on inflation control, are there any exchange rate and open market operational tools available?

Lu political commissar: according to the experience of other countries, unless the exchange rate is up to two digits above, it can not play a significant role in curbing inflation. Chinese exporters obviously can not afford such a large appreciation.

In the case of single digit appreciation, exchange rate usually plays a very limited and weak auxiliary role in restraining inflation.

There is still room for interest rate policy.

Up to now, our benchmark interest rate has not exceeded the level in the first quarter of 2008, no matter from the absolute level or from the year-on-year increase.

Although monetary policy has been tightening and increasing interest rates several times, the profit of industrial enterprises in 1-6 months has rebounded by 0.8 percentage points over the same period of 1-5 months. In addition to joint-stock enterprises, all kinds of other enterprises' profit growth has rebounded, indicating that enterprises can still bear a certain increase in interest rates.

At the same time, the continued outflow of deposits in the banking system also indicates the need to raise interest rates.

The open market is the daily operation of the central bank, and there is room and necessity at all times.

We continue to maintain the expected 1-2 interest rate increase during the year, but the timing of the policy becomes harder to judge.

If the US sovereign credit rating storm can quell in the short term, then China will be unable to rule out the possibility of continuing to raise interest rates.

It is possible to raise the deposit reserve rate 1-2 times during the year.