Central Bank Deposit Rate Or Further Down &Nbsp, The Market Ushered In Good.

The central bank's open market operation was suspended in the first week after the announcement of the deposit reserve ratio was cut.

In February 22nd, market participants revealed that the central bank did not require the first tier dealers to report the central bank's demand and the demand for repo the same day, which means that the open market operation next day will continue to be suspended.

The previous day, the central bank just changed a few weeks ago did not issue a central bank, but continued the practice of repo, did not carry out any open market operation.

This is totally different from the cumulative net return of 174 billion yuan in the open market after the central bank lowered its deposit rate in December last year.

In this regard, CICC recently released a report that last December (measures) were mostly implemented in the context of the decrease in foreign exchange holdings. The aim was to reverse the impact of foreign exchange on liquidity and not to reduce market interest rates, so the central bank also increased its openness.

"However, this reduction is implemented in the case of net inflow of foreign exchange, which may aim at insufficient credit demand.

Overnight repo rate stands 5%

In February 18th, the central bank announced that the deposit reserve ratio should be reduced by 0.5 percentage points from 24.

Since then, on the first trading day (20), the central bank still requires the first tier dealers to report the demand for the 28 day and 91 day repurchase. The market interpreted this as that although the central bank has been suspended for eighth consecutive weeks, the open market operation will continue.

But on the 21 day, the central bank did not carry out any repo operation, which surprised the market participants.

Analysts believe that this is because, although the deposit reserve ratio has been announced down, the real release of funds to the market is in the 24 day, but in recent days the market capital is still very tense, if continued to return to the cage funds, the market may be difficult to bear.

"Everyone is borrowing the overnight money, and the funds are still tight.

It is said that some large bank deposits have been retrieved after maturity, and the return rate of bank deposits is too slow after the Spring Festival.

A state-owned big trader said 22 days ago.

This week the open market has only 2 billion yuan of funds due to maturity, so even if the central bank suspends open market operations, it has been operating since last week.

There are also market participants believe that the above measures on the one hand, because the central bank's financial constraints, on the other hand, because the deposit rate will decline, the central bank and the repo rate will be adjusted, if this time the issuance of central bank or repurchase, tight funds may make the issue of interest rates are high, so 24 days later, the central bank will be able to resume open market operations, including one-year central bank votes may also soon restart.

But CICC believes that the motive of this central bank to reduce the deposit rate is different from that of December last year. Its purpose is to further reduce market interest rates and stimulate credit demand recovery. It is not merely a reverse hedge against foreign exchange reduction. Therefore, the volume of open market returns will not increase correspondingly, and the issuance of one-year central bank tickets will not be resumed.

"The open market in March will reach 244 billion yuan, significantly higher than 1-2 months.

If the open market can maintain a net supply in March, the 7 day repo rate is expected to break 3.5% to 3%.

CICC reported.

Data released by the central bank on 20 showed that foreign exchange accounted for 140 billion 900 million yuan in January, reversing the negative growth trend for three consecutive months, but still lower than the average level of 2316 yuan last year.

This seems to provide a corroboration for the central bank's lowering the deposit rate at this time.

"Foreign exchange holdings did not last year's net decrease in the fourth quarter, showing a positive growth, mainly due to the trade surplus and the appreciation of RMB appreciation, which also showed that investors had certain confidence in steady growth.

But in January, the increase in foreign exchange holdings was significantly lower than the average level last year, or even lower than the market's expectations for this year's average level.

The annual general picture is a bit obvious.

This is an important factor to further reduce the deposit rate in the future.

Lian Ping, chief economist at Bank of communications, thinks.

CICC said that food prices fell sharply in the first half of February, easing inflation pressure, and initially estimated that CPI would drop to near 3.5% in February. If food prices continued to drop sharply after two days, it would be 3.5% below.

"The two quarter CPI growth is expected to fall to 3% below the same period, when the central bank will lower the frequency of deposit rate."

Although many analysts expect that the reserve requirement ratio will be further lowered, the currency will be reduced.

"Fiscal savings increased by 350 billion yuan in January, much higher than the increase in foreign exchange.

If the reverse repurchase month expires, January is actually net liquidity.

Therefore, the reserve rate on the 18 day is only a "compensatory reduction", which does not mean loosening at all.

Societe Generale

Xia Bin, a member of the central bank's monetary policy committee, shares similar views.

"I do not think that the direction of sound monetary policy this year will change.

Lowering the deposit reserve ratio by 0.5 percentage points is only based on prudent monetary policy intent to ensure a reasonable supply of money.

In the specific operation, perhaps based on the slowdown in the growth of foreign exchange reserves, perhaps the appropriate fine-tuning of the previous stage of money supply may be based on the current situation and the future of the two.

Generally speaking, the basic situation of prudent monetary policy will not change, nor will it change.