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Tencent News "First Line"

Author: Zhu Yuting Editor: Liu Peng

On July 22, the central bank issued an open market business announcement, announcing that the 7-day open marketReverse repoThe operation adopts a fixed interest rate and quantity bidding, and the operating interest rate is adjusted from 1.8% to 1.7%.

In addition to the adjustment of the bidding method, the interest rate of this open market 7-day repurchase operation was also lowered by 10 basis points, which was the first adjustment since August 2023.

Industry insiders analyzed that the 10bp reduction in the 7-day reverse repurchase operation rate will also help increase financial support for the real economy.

According to data released by the National Bureau of Statistics, my countryGDPThe year-on-year growth rate was 4.7%, which was slower than that in the first quarter, especially the weak recovery of residents' consumption. The central bank's decisive interest rate cut this time showed the determination of monetary policy to protect the economic recovery, and was a positive response to the requirement of the Third Plenary Session of the 20th CPC Central Committee to "unswervingly achieve the annual economic and social development goals."

Experts said that the reduction in policy interest rates is expected to be gradually transmitted to the real economy through the financial market, promoting the reduction of comprehensive financing costs, consolidating the upward trend of the economy, and breaking the negative cycle of downward long-term bond yields and weakening expectations.

In this regard, industry insiders said that the downward trend in the 7-day reverse repurchase operation interest rate does not mean that there is room for long-term bond yields to fall.

The central bank lowered the 7-day reverse repurchase rate this time, aiming to increase counter-cyclical regulation and smooth out short-term economic fluctuations;BondsThe yield reflects more the long-term economic trend and should be evaluated from a cross-cycle perspective.

Industry insiders analyzed that the continued decline in this round of long-term bond interest rates has already included expectations for this interest rate cut, and even has a significant overshoot, which does not mean that it needs to continue to fall following the decline in the 7-day reverse repurchase operation interest rate.

In fact, the current long-term bond interest rate is too low, and foreign media are generally concerned about the potential risks therein; too low long-term bond interest rates can easily lead to the self-realization of weak expectations, while the fundamentals of my country's economy are improving in the long run.

The central bank's interest rate cut will help support economic recovery and boost medium- and long-termEconomic Expectations, and will also help drive up long-term interest rates.

It is expected that the central bank will adopt comprehensive measures in the future, borrow and sell government bonds when necessary, timely correct and block the accumulation of risks in the bond market, and maintain a normal upward-sloping yield curve. The central bank is determined and has measures to stabilize market expectations.

On the other hand, explicitly stating the open market operation interest rate will help strengthen the policy attributes of the 7-day reverse repurchase rate.

Open market bidding methods include price bidding and quantity bidding. The winning bid price of the former is determined by the game between supply and demand parties, which is theoretically uncertain, while the price of the latter is given.

In the past, the central bank's open market 7-day reverse repurchase operations adopted price bidding. Although the winning bid rate remained unchanged most of the time, operations still needed to be carried out daily to release clear interest rate signals.

Considering that the 7-day reverse repurchase operation rate in the open market has basically assumed the function of the main policy interest rate, in order to enhance the authority of the policy interest rate and effectively stabilize market expectations, it is necessary to optimize the bidding method to a fixed rate and quantity bidding, and explicitly indicate the operating interest rate. This is also a reflection of a sound market-oriented interest rate regulation mechanism.