the central bank’s major meeting! ten key points to release positive signals
2024-10-04
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people's bank of chinathe monetary policy committee's regular meeting for the third quarter of 2024 (the 106th overall) was held in beijing on september 25.
a reporter from the financial times summarized the key points of this meeting:
- it is necessary to implement prudent monetary policy accurately and effectively, pay more attention to counter-cyclical adjustments, better utilize the dual functions of monetary policy tools in terms of total volume and structure, strive to expand domestic demand, boost confidence, and promote the continued recovery of the economy.
- it is necessary to increase the intensity of monetary policy control and improve the accuracy of monetary policy control.
- improve the formation and transmission mechanism of market-based interest rates, strengthen the guiding role of the central bank's policy interest rates, give full play to the role of the self-discipline mechanism for market interest rate pricing and the effectiveness of the market-based adjustment mechanism for deposit interest rates, and promote the stabilization and decline of corporate financing and residents' credit costs.
- we will enrich the monetary policy toolbox, conduct government bond sales, and pay attention to changes in long-term yields.
- strengthen the guidance of expectations, enhance exchange rate flexibility, maintain the basic stability of the rmb exchange rate at a reasonable and balanced level, prevent the formation of unilateral consistent expectations and self-reinforcement, and guard against the risk of exchange rate overshooting.
- effectively implement various existing structural monetary policy tools, promote the implementation of new tools such as swap facilities for securities, funds, and insurance companies, and stock repurchases, holdings, and re-lending, and maintain the stability of the capital market.
- promote the process of technological innovation and technological transformation and re-loan use, and increase financial support for large-scale equipment updates and trade-in of consumer goods.
- fully understand the new changes in the supply and demand relationship in the real estate market, comply with the people's new expectations for high-quality housing, strive to promote the implementation of financial policies and measures that have been introduced, support the revitalization of existing idle land, reduce existing mortgage interest rates, and promote the stable and healthy development of the real estate market.
- implement financial policies and measures to promote the healthy development of the platform economy.
- effectively promote high-level two-way opening up of finance and improve economic and financial management capabilities and risk prevention and control capabilities under opening conditions.
"this meeting continues the general tone of recent monetary policy and further emphasizes that supportive monetary policy will be counter-cyclical to support the recovery of the economy." said zhang jun, chief economist of china galaxy securities.
promote the implementation of new establishment tools
this meeting mentioned "promoting the implementation of new establishment tools such as securities, funds, and insurance company swap facilities and stock repurchases, holdings, and re-lending".
at the press conference of the state council information office held on september 24, the central bank mentioned relevant tools. pan gongsheng, governor of the people's bank of china, announced that in order to maintain the stability of my country's capital market and boost investor confidence, the central bank, together with the china securities regulatory commission and the financial the state administration of supervision will negotiate and create new monetary policy tools to support the stable development of the capital market. specifically, this new tool includes two tools: swap facilities for securities, funds, and insurance companies, and special re-loans for stock repurchases and holdings increase. this is also the first time that the central bank has established structural monetary policy tools to support the capital market.
"stabilizing the capital market has become a key consideration." zhang jun said. wen bin, chief economist at china minsheng bank, also holds a similar view. he said that this was proposed by the third plenary session of the 20th cpc central committee to "improve the capital market functions that coordinate investment and financing", "promote the healthy and stable development of the capital market", "support the entry of long-term funds into the market" and "establish a long-term mechanism to enhance the inherent stability of the capital market". "the specific embodiment is also an implementation measure to "boost investor confidence and enhance the inherent stability of the capital market" pointed out at the political bureau meeting of the central committee on july 30.
specifically, the "securities, funds, and insurance companies swap facility" is a convenient tool for the central bank to improve the ability of securities, funds, and insurance companies to obtain funds and increase their stock holdings. qualified securities, funds, and insurance companies can use the funds they hold to bonds, stock etfs, csi 300 constituent stocks and other assets are used as collateral to obtain highly liquid assets such as treasury bonds and central bank bills from the central bank. after being liquidated, they can continue to invest in the stock market. the central bank stated that the first phase of the swap facility will be 500 billion yuan, and the funds obtained through this tool can only be used for stock market investment, and the scale will be expanded depending on the situation in the future.
the "special refinancing for stock repurchases and increases" uses an incentive compatibility mechanism to guide 21 national banks to issue loans at preferential interest rates to qualified listed companies and major shareholders on the premise of making independent decisions and assuming their own risks. used to repurchase and increase stock holdings. after the relevant departments verify the purpose of the loan, the central bank will provide re-loan support based on 100% of the loan principal, with an initial amount of 300 billion yuan. the central bank said that if this tool is used well, it can add another 300 billion yuan, or even a third 300 billion yuan.
"generally speaking, the two new tools created by the central bank will more directly guide the flow of funds to the stock market, provide convenient tools for securities, funds, and insurance companies to adjust and increase stock holdings, and provide supportive tools for long-term funds to enter the stock market. , it is expected to help enhance investor confidence and maintain a more stable and high-quality development of the capital market," wen bin said.
real estate portfolio punches are intensively implemented
this regular meeting also mentioned a series of policies to support real estate. the meeting stated that it is necessary to "fully understand the new changes in the supply and demand relationship in the real estate market, comply with the people's new expectations for high-quality housing, strive to promote the implementation of financial policies and measures that have been introduced, and support the revitalization of existing stocks." idle land, reduce existing mortgage interest rates, and promote the stable and healthy development of the real estate market."
in fact, on the same day that the news of the regular meeting was released, the central bank, together with the state administration of financial supervision, issued four financial support real estate policies, including improving the interest rate pricing mechanism for commercial personal housing loans, optimizing the minimum down payment ratio for personal housing loans, and optimizing refinancing of affordable housing. relevant requirements, extension of the period of some real estate financial policies, etc.
political commissar lu, chief economist of industrial bank, said that the statements made at the recent politburo meeting have sent a clear signal. compared with july, the politburo meeting in september took a more positive stance. for example, the july meeting stated that it “promotes the stable and healthy development of the real estate market,” and in september the statement was changed to “promote the real estate market to stop falling and stabilize,” which is enough to highlight the importance that decision-makers attach to this issue.
the central bank's series of combined punches are a timely move in response to changes in supply and demand in the real estate market. chen wenjing, policy research director of the china index research institute, mentioned that this time the central bank quickly lowered the existing mortgage interest rate policy and actively responded to the spirit of the politburo meeting on september 26. the pace of policy implementation and the self-discipline mechanism for market interest rate pricing required all commercial banks to implement the time. sooner, it will have a more positive effect on stabilizing market expectations.
industry insiders told reporters that after the batch adjustments are completed, the decline in existing mortgage interest rates is expected to reduce bank interest income by approximately 150 billion yuan. however, after the interest rate difference between new and old mortgages narrows, early loan repayments will be significantly reduced, which will help banks stabilize loan scale and improve loan quality. in addition, considering that the people's bank of china lowered the deposit reserve ratio by 0.5 percentage points and the policy interest rate by 0.2 percentage points, it is expected to drive down mlf interest rates and other interest rates, which will also save banks' liability costs, improve banks' sustainable operating capabilities, and provide better support for banks the real economy provides necessary support.
in addition to the four real estate policies that have been implemented so far, this meeting added a new emphasis on "supporting the revitalization of existing idle land." pan gongsheng pointed out at a press conference of the state council information office on september 24 that on the basis of using some local government special bonds for land reserves, research will be conducted on allowing policy banks and commercial banks to lend loans to support conditional enterprises to acquire land for real estate enterprises in the market. revitalize existing land and ease the financial pressure on real estate companies. when necessary, the people's bank of china can also provide refinancing support.
at the same time, this meeting added an emphasis on "more targeted meeting of reasonable consumer financing needs" and "lowering of existing mortgage interest rates." many experts pointed out that as the macro policy orientation shifts to promoting consumption, these two policies aim to maintain consistency and emphasize support for consumption. lowering existing mortgage interest rates will help reduce early repayments, reduce residents' debt burden, and increase residents' spending power.
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