Hot News, The Central Bank Cut Interest Rates, Released 400 Billion Yuan, And The Internal And External Environment Stimulated The Active Market Economy.

Yesterday (5), the central bank announced that it announced a rate cut. This is the first time that the 1-year MLF rate has been cut since April 2018.

　　   The communiqu of the central bank said:

In November 5, 2019, the people's Bank of China launched the medium term loan facility (MLF) operation of 400 billion yuan (RMB, the same below), which is basically the same as the maturity date of the day, with a period of 1 years, and the winning rate is 3.25%, down 5 basis points from the previous period. No reverse repurchase operation is launched today.

Li Li! Interest rate news to boost financial markets

Affected by the favorable news of interest rate cuts, the financial markets are stimulated. Interest rate cut news, the interbank spot rate of return has increased, the 10 year national active coupons and 10 year treasury bonds active coupon yield down quickly. Treasury bond futures rose briefly, and the 10 year debt contract increased by 0.32%.

　　 The A share market also rose all the way. As of noon, Shanghai's index rose 0.68%, swords 3000 points, Shenzhen's index rose 0.63%, and GEM board rose 0.31%. Shanghai 50 hit a new high of 21 months, and the net flow of north capital to nearly 3 billion 500 million yuan.

Note:

Medium term loan convenience (MIF): it is the central bank that borrows money to finance institutions, which is issued by way of pledge, and provides high-quality bonds such as treasury bonds, central bank bills, policy financial bonds and high-grade credit bonds as qualified pledge.

External loose environment affects opening interest rate cuts

Some experts say that the 1 - year MLF has been maintained at 3.3% since April 2018. From the outside, the Central Bank of the world's major economies restarted easing monetary policy and opened up room for reducing MLF interest rates.

In October 31st, the Federal Reserve announced a 25 basis point cut in interest rates, reducing the target range of the federal funds rate to 1.50%-1.75%, the third rate cut in the United States (August, September and October).

At the same time, the Fed also adjusted the excess reserve ratio (IOER) from 1.80% to 1.55%, and reduced the discount rate to 2.25%. In the words of Powell, chairman of the Federal Reserve, the US monetary policy has now entered a relaxed range, which further opens room for China's monetary policy to cut interest rates.

The Federal Reserve has cut interest rates continuously, raising the interest rate cut by the global central bank. Many central banks have cut interest rates this year.

In October 25th, the Russian central bank cut interest rates by 50 basis points to 6.5%, and cut interest rates for the fourth consecutive meeting.

In October 24th, the Indonesian central bank lowered its benchmark interest rate by 25 basis points to 5%, the fourth rate cut in the year.

In October 24th, Philippines lowered the reserve requirement ratio by 100 basis points, and came into effect in December.

In October 24th, the Turkey central bank cut interest rates by 250 basis points to 14%, the third rate cut for the year, and the market expected to cut interest rates by 100 basis points.

In October 24th, although the European Central Bank announced that the three key interest rates remained unchanged, it reiterated that the purchase plan for net assets was restarted from November 1st, with a scale of 20 billion euros per month.

(above is Beijing time)

The downward pressure of the internal economy is great, so it is urgent to stimulate the market.

From inside, the domestic economy is facing downward pressure, the central bank timely cut interest rates, effectively guide the LPR interest rate downward, reduce the financing cost of the real economy, stabilize investment and consumption, and ensure that the macro-economic operation is in a reasonable range.

In October 18th, the National Bureau of Statistics announced that: in the first quarter, gross domestic product (GDP) grew by 6.4%, the two quarter increased by 6.2%, the three quarter increased by 6%, and the 6% GDP growth rate was not low, but showed a trend of declining growth rate.

In addition, the third quarter of the consumer price index (CPI) uplink is mainly caused by the continuous inflation of pork prices structural inflation, but whether it will constitute a substantive constraint on monetary policy loosening, the market view is different, but it will definitely be affected, and forecast the fourth quarter will continue to rise accordingly.

Note:

Loan base interest rate (LPR), loans issued by banks and other financial institutions. At present, the lending rates offered by 18 banks and other financial institutions to their superior customers are quoted by MLF interest rates and their respective bank comprehensive costs. The central bank stipulates that loans for commercial banks (including mortgage interest rates) will be priced in reference to LPR in the future.

What are the life effects of the central bank's interest rate cut?

If we go to the bank to save money, the interest will be reduced, which will stimulate more consumption, even consider the financial products such as banks; the interest rates of commercial loans and provident fund loans will drop, and the pressure of mortgage loans will be smaller; the loan environment is loose, and financing and venture capital investment will become easier; the stock market will benefit significantly, and the real estate stocks will be the most favorable.