support the property market and the stock market! the central bank has launched multiple measures to boost confidence and also responded to hot topics such as government bonds and exchange rates.
2024-09-24
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lowering the deposit reserve ratio and policy interest rate, lowering the interest rate on existing mortgages and unifying the minimum down payment ratio for mortgages to 15%, and innovating structural monetary policy tools for the first time to support the capital market. at a press conference held by the state council information office on the morning of september 24 on financial support for high-quality economic development, pan gongsheng, governor of the people's bank of china, announced a number of major policies in one breath.
"the trend of economic stabilization and improvement will be further consolidated and strengthened. the relatively strong monetary policy introduced by the people's bank of china this time will help support the real economy, promote residents' consumption and boost market confidence," said pan gongsheng.
at the press conference, pan gongsheng also gave the latest authoritative judgment on the trend of the rmb exchange rate and long-term government bond yields after the fed’s interest rate cut.
a 0.5 percentage point reduction in the reserve requirement ratio will release about 1 trillion yuan of long-term liquidity. there is still room for improvement after the reduction.
pan gongsheng said that the deposit reserve ratio will be lowered by 0.5 percentage points in the near future, providing about 1 trillion yuan of long-term liquidity to the financial market; the deposit reserve ratio may be further lowered by 0.25-0.5 percentage points this year, depending on the market liquidity situation. the central bank's policy interest rate will be lowered, that is, the 7-day reverse repurchase operation rate will be lowered by 0.2 percentage points, from the current 1.7% to 1.5%, while guiding the loan market quotation rate and deposit rate to decline simultaneously to maintain the stability of the net interest margin of commercial banks.
after the implementation of the above-mentioned reserve requirement ratio cut policy, the deposit reserve ratio of large banks will be reduced from 8.5% to 8%, and that of medium-sized banks will be reduced from 6.5% to 6%. rural financial institutions are not included in the adjustment. after the implementation of the reserve requirement ratio cut policy, the average deposit reserve ratio of the banking industry is about 6.6%.
pan gongsheng said that compared with the central banks of major economies in the world, there is still room for improvement. as for the deposit reserve ratio tool, there are still three months before the end of the year, and we may further reduce it by 0.25-0.5 percentage points depending on the situation.
the 7-day reverse repo rate fell by 20 basis points, and it is expected that the lpr and deposit rates will fall by 0.2 to 0.25 percentage points.
following july, the central bank officially announced that it would lower the policy interest rate. the 7-day reverse repurchase rate in the open market, which is the main policy interest rate of the central bank, will be reduced by 20 basis points, from 1.7% to 1.5%. under the market-oriented interest rate regulation mechanism, the adjustment of the policy interest rate will lead to the adjustment of various market benchmark interest rates. it is expected that after this policy interest rate adjustment, the medium-term lending facility (mlf) interest rate will be reduced by about 0.3 percentage points, and the loan market benchmark rate (lpr) and deposit interest rates are expected to decline by 0.2 to 0.25 percentage points.
regarding the market's bank net interest margin, pan gongsheng said that the impact of this interest rate adjustment remained neutral overall.
pan gongsheng said that lowering the interest rate on existing mortgage loans will reduce banks' interest income, but will also reduce customers' prepayments. the central bank's reserve requirement cut is equivalent to directly providing banks with low-cost, long-term funding operations. medium-term lending facilities and open market operations are the main ways for the central bank to provide medium- and short-term funds to commercial banks. the decline in interest rates will also reduce banks' funding costs. in addition, it is expected that the loan market benchmark rate and deposit rate will decline symmetrically. in the previous deposit rates, we guided the deposit rate downward through the interest rate self-discipline mechanism, and the repricing effect formed will be cumulatively manifested. therefore, in the design of the policy adjustment plan, the technical team of the people's bank of china has conducted multiple rounds of careful quantitative analysis and evaluation. the impact of this interest rate adjustment on bank earnings is neutral, and the bank's net interest margin will remain basically stable.
guide banks to lower existing mortgage rates, with an average drop of 0.5 percentage points expected, and unify the minimum down payment ratio for mortgages to 15%
to support the real estate market, the central bank has launched five specific measures in one go.
regarding the interest rate spread between old and new mortgages, which has attracted attention since the release of the policy floor of the national mortgage rate on may 17, the central bank announced that it will guide commercial banks to reduce the interest rates of existing mortgages to near the interest rates of new loans, with an estimated average reduction of about 0.5 percentage points. at the same time, the minimum down payment ratio for first and second mortgages will be unified, and the minimum down payment ratio for second mortgages at the national level will be reduced from the current 25% to 15%.
pan gongsheng said that banks' reduction of interest rates on existing mortgage loans will help further reduce borrowers' mortgage interest expenses. it is estimated that this policy will benefit 50 million households and 150 million people, reducing the total interest expenses of households by about 150 billion yuan on average each year. this will help promote the expansion of consumption and investment, and will also help reduce early loan repayments. at the same time, it can also reduce the space for illegal replacement of existing mortgage loans, protect the legitimate rights and interests of financial consumers, and maintain the stable and healthy development of the real estate market.
regarding the unified down payment ratio, pan gongsheng said that each locality can formulate policies based on the city, independently determine whether to adopt differentiated arrangements, and determine the minimum down payment ratio within its jurisdiction. at the same time, commercial banks will negotiate with customers to determine the specific down payment ratio level based on their risk status and willingness.
in addition, the central bank announced that it would increase the proportion of central bank funds supporting the 300 billion yuan affordable housing re-loan created in may from 60% to 100%. that is, originally commercial banks loaned 10 billion yuan and the people's bank of china provided 6 billion yuan, but now commercial banks loan 10 billion yuan and the people's bank of china provides 10 billion yuan in low-cost funds, which will accelerate the process of destocking commercial housing and enhance market-oriented incentives for banks and acquisition entities.
at the same time, the central bank will extend the two policy documents, commercial property loans and "16 financial measures", which were due to expire before the end of the year, to the end of 2026.
at the same time, support the acquisition of real estate companies' stock of land. on the basis of using some local government special bonds for land reserves, research is being conducted to allow policy banks and commercial banks to lend to qualified companies to support the market-based acquisition of real estate companies' land, so as to revitalize stock of land and ease the financial pressure on real estate companies. when necessary, the people's bank of china can also provide re-lending support.
the interest rate for stock repurchase and shareholding increase refinancing is 1.75%, and the first phase quota is 300 billion yuan
in creating new monetary policy tools to support the stable development of the stock market, the central bank will introduce two new tools.
the first is to create a securities, fund, and insurance company swap facility to support eligible securities, funds, and insurance companies to obtain liquidity from the central bank through asset pledges. this policy will greatly enhance the institutions' ability to obtain funds and increase stock holdings. the second is to create a special re-loan for stock repurchase and increase holdings, guiding banks to provide loans to listed companies and major shareholders to support the repurchase and increase of stock holdings.
regarding the swap facilities for securities, funds and insurance companies, pan gongsheng said that this work supports eligible securities, funds and insurance companies. these institutions will be determined by the china securities regulatory commission and the state administration of financial supervision in accordance with certain rules. they can use the bonds, stock etfs, csi 300 constituent stocks and other assets they hold as collateral to exchange for high-liquidity assets such as treasury bonds and central bank bills from the central bank, which will greatly enhance the relevant institutions' ability to obtain funds and increase stock holdings.
the initial operation scale of the swap facility is 500 billion yuan, and the scale can be expanded in the future depending on the situation. the funds obtained through this tool can only be used to invest in the stock market.
the stock repurchase and shareholding increase re-lending tool guides commercial banks to provide loans to listed companies and major shareholders for the purpose of repurchasing and increasing shareholdings of listed companies.
in terms of specific operations, the central bank will issue re-loans to commercial banks, providing a 100% funding support ratio, and the re-loan interest rate is 1.75%. the loan interest rate issued by commercial banks to customers is around 2.25%, which means that 0.5 percentage points can be added. the interest rate of 2.25% is also very low now. the first installment is 300 billion yuan. if this tool is used well, another 300 billion yuan can be added, or even a third 300 billion yuan. all are possible. but it depends on the market situation and some evaluation is needed.
at the same time, this tool is applicable to listed companies of different ownerships, such as state-owned enterprises, private enterprises, and mixed-ownership enterprises, regardless of ownership. the people's bank of china will work closely with the china securities regulatory commission and the financial supervision administration, and also requires the cooperation of market institutions to jointly do a good job in this work.
the rmb exchange rate still has a relatively stable and solid foundation. don’t “bet on the direction of the exchange rate” or “bet on a unilateral trend”
pan gongsheng said that the monetary policies of major economies have been adjusted recently, the pressure on the depreciation of the rmb exchange rate has been significantly alleviated, and it has turned to appreciation.
pan gongsheng stressed that the people's bank of china's position on exchange rate policy is clear and transparent. first, we must uphold the decisive role of the market in exchange rate formation and maintain exchange rate flexibility. second, we must strengthen expectation guidance, prevent the foreign exchange market from forming unilateral consistent expectations and self-fulfilling expectations, guard against exchange rate overshoot risks, and maintain the basic stability of the rmb exchange rate at a reasonable equilibrium level.
he pointed out that the exchange rate is a price ratio between currencies, and its influencing factors are very diverse, such as economic growth, monetary policy, financial markets, geopolitics, unexpected risk events, etc., all of which will have an impact on the exchange rate. from the external situation, due to the differentiation of economic trends in various countries, geopolitical changes such as the us election, and fluctuations in international financial markets, the uncertainty of the external environment and the trend of the us dollar still exists.
judging from the domestic situation in china, we believe that the rmb exchange rate still has a relatively stable and solid foundation.
first, from a macro perspective, the trend of economic stabilization and improvement will be further consolidated and strengthened. the relatively strong monetary policy introduced by the people's bank of china this time will help support the real economy, promote residents' consumption and boost market confidence.
second, the balance of payments remained basically stable. in the first half of the year, the current account surplus to gdp ratio was 1.1%, which should be considered to be in a relatively reasonable range.
third, the people's bank of china and the state administration of foreign exchange attach great importance to the construction of the foreign exchange market. market participants are more mature, trading behavior is more rational, and the market's resilience has been significantly enhanced. in the context of the two-way floating of the rmb exchange rate, participants should also look at exchange rate fluctuations rationally, strengthen the concept of risk neutrality, and not "bet on the direction of the exchange rate" or "bet on unilateral trends". enterprises should focus on their main businesses, and financial institutions should continue to serve the real economy.
the current treasury yield curve has problems such as insufficient far-end pricing and insufficient stability.
pan gongsheng said that currently, the treasury bond yield curve, as an important price signal, still has problems such as insufficient far-end pricing and insufficient stability. the central bank issued risk warnings on long-term treasury bond yields and strengthened communication with the market in order to curb the herd effect and the potential systemic risks caused by the unilateral downward trend of long-term treasury bond yields.
he analyzed that the downward trend in china's treasury bond interest rates in the early stage was due to the fact that the people's bank of china guided the market interest rates downward through policy interest rates, the slow supply of government bond issuance in the early stage, and some other factors such as the weak risk awareness of small and medium-sized market financial institutions, which fueled the trend and the herd effect.
pan gongsheng stressed that it is also the responsibility of the central bank to maintain a good trading order in the bond market. recently, the people's bank of china has found some cases of price manipulation, lending accounts, and profit transfer in the bond market. we will intensify the investigation and punishment of illegal and irregular behaviors in the interbank bond market and make them public in due course. in the early stage, the national association of financial market institutional investors has made several cases public, and is currently in the process of investigation. once the investigation is completed, it will be announced to the whole society.
the paper reporter chen yueshi
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