Net investment in the open market for three consecutive days, prudent and neutral policies to support the real economy

The central bank’s open market operations in 2017

Beijing (CNFIN.COM/XINHUA08.COM) — The central bank conducted 70 billion yuan of 7-day, 60 billion yuan of 14-day and 40 billion yuan of 28-day reverse repurchases in the open market on Monday (February 20). In operation, the winning bid rates remained unchanged at 2.35%, 2.5% and 2.65% respectively. As 70 billion yuan of reverse repos expired in the central bank’s open market today, a net injection of 100 billion yuan was made in a single day, marking the third consecutive day of net injection.

The central bank has 315 billion yuan of reverse repurchases due in the open market this week. From Monday to Friday, the scale is 70 billion yuan, 40 billion yuan, 65 billion yuan, 90 billion yuan and 50 billion yuan respectively. No central bank bills and positive repurchases expire. In addition, 53.5 billion yuan of MLF operations expired on Monday.

Last Thursday, the People’s Bank of China conducted a 250 billion yuan reverse repurchase operation in the open market. Combined with the maturity liquidity of the day, it was the first time the central bank resumed net investment since January 22. On the following Friday, another net liquidity injection of 80 billion yuan was achieved. However, in view of the continuous withdrawal of funds at the beginning of the week, the net withdrawal last week was 150 billion yuan.

Last Friday, the central bank released the “China Monetary Policy Implementation Report for the Fourth Quarter of 2016”. The article changed the previous formulation of “sound monetary policy” and used the expression “sound and neutral monetary policy” for the first time.

Deng Haiqing, global chief economist of Jiuzhou Securities, believes that the “stable and neutral” mentioned by the central bank is most likely referring to “stable and slightly loose”. The monetary policy trend section of this report also contains the statement that “monetary policy may be prudent and slightly loose in implementation during some periods”, which makes the current monetary policy clearly contrast with the previous monetary policy, and also shows that the central bank’s monetary policy has reached an inflection point.

Jiang Chao, chief economist of Haitong Securities, said that judging from the latest statement of the central bank, financial deleveraging will be the main policy direction in 2017, which also means that the demand for real estate that increased leverage last year will continue to be affected. of inhibition.

, and this is also in line with the orientation of reducing capital market volatility and preventing systemic risks. In order to guide the flow of funds to the real economy, it means that the overall marginal tightening of monetary policy will be limited. Therefore, the goals of deleveraging and suppressing maturity mismatch are expected to be achieved more through the flexible combination of various monetary policy tools.

As for how to view the current round of pre-adjustment and fine-tuning of monetary policy, the Financial Times quoted a regulator as saying that after monetary policy turns to a steady and neutral stance, monetary policy still faces many difficulties, among which , firstly, to clear the transmission channels of monetary policy and invigorate the liquidity stock; secondly, considering the impact of the Federal Reserve’s interest rate hikes on capital flows and the RMB exchange rate, monetary policy is subject to external constraints. Regarding deleveraging in the real sector, analysts said that the sectors that benefited most from the previous monetary policy easing cycle may be affected in this round of adjustments. Among them, firstly, local governments and real estate developers; secondly, enterprises with poor qualifications in non-overcapacity industries. .