LPR has not changed in March, and the next wave of interest rate cuts is expected to be on the road

LPRhasnotchangedinMarch,andthenextwaveofinterestratecutsisexpectedtobeontheroad
Therewillcertainlybeanup-to-datequotefortheLPR(LoanMarketQuotedInterestRate)thatislikelytooffsetthebank’sdebtsituationand“makeprofit”expectations.AccordingtotheinterbanklendingcenterannouncedonMarch20,the1-yearLPRis4.05%,LPRisover5years.75%,whichremainedunchangedfromthelastquotation.Inthisweek’sdirectionaldowngradelanding,theLPRmarketremainsunchanged,makingothersfeelslightlymorethanexpected.However,intheFebruary1-yearperiod,LPRswithaperiodofmorethan5yearshave”double-dropped”once,causingpeopletobelievethatthesituationofinternalreworkandresumptionofproductionhasimprovedsignificantly,andtheeconomyitselfhasrecoveredfaster.ThecurrenturgencyofloweringLPRagainseemsnotBig.Inaddition,150trillionstockloanswillbelinkedtoLPRfromMarch.Iftheinterestrateofloansiscontinuouslylowered,itwillalsomakethebanksunabletoeatup.Onewaytohelpbanksfurtherreducetheinterestratetotherealeconomy,whilenotoverburdeningthem,istocutinterestratestemporarily.Especiallyinthecurrentenvironmentwheremorethan20countriesaroundtheworldhavesuccessivelycutinterestratesto”savethemarket”,manytargetpeoplebelievethatthemonetaryandmonetarypolicyspacehasbeenopened,andtherearesubsequentinterestratecuts,andthepossibilityofacomprehensiveratereductionandevenprecipitationrateadjustment,butitstillexceedsthestrongThestimuluspolicyisexpectedtoreleasetheGDPmonetarypolicymorepreciselyandmoremoderately.WhydidLPR”walkinplace”inMarch?TheAirForce,withaone-yeartermandanLPRofmorethanfiveyears,hada”doubledrop”inFebruary.Amongthem,the1-yearLPRfellby10basispointsto4.05%,LPRover5yearsfellby5basispointsto4.75%.”Slightlybeyondexpectations”isalargenumberofopponents’evaluationoftheMarchLPRmarketunchanged,becausethe550billionUSdollartargeteddowngradehasjustlandedthisweek.WenBin,thechiefofficialofChinaMinshengBank,statedthatthroughtheearly-yearandMarch16directionalreductionandsuperposition,coupledwiththe500billionyuanre-loanrediscountamount,theinterestrateforsmallre-lendingtosupportagricultureandagriculturewasreduced.The25digitsarealleffectiveinreducingbankcosts,buttheyarenotreflectedinLPRquotes.LPR-linkedMLF(medium-termlendingfacility)operationaccountsforarelativelylowproportionofthefundingsourceofthebankingsystem.Therefore,fromtheperspectiveoftheentiredebtstructureofthebank,MLFandRRRcutsarerelativelylimitedtothereductionofbankcosts.However,aftertheRRRcutinJanuarythisyear,theLPRinterestratehasnotbeenadjusted,andsincethequotationmechanismreforminAugustlastyear,LPRhasnotrecordedarecordoftwoconsecutivemonthsofdecline.MengXiangjuan,chieffixedincomeanalystatShenwanHongyuanSecurities,believesthatLPRhasnotbeenloweredslightlybelowmarketexpectations,butconsidersthatithaslowered10basispointssincethebeginningoftheyear,andatthesametimehasalternatelyloweredthetargetRRR,liquidityisloose,short-termmonetarypolicyisexpectedtotemporarilyincreaseEntitiesaremainlycohesive.Judgingfromtheperformanceofthebondandequitymarketstoday,theyhavebeenaffectedtoomuch.SpeakingofthereductionofLPRinFebruary,itwasinthecontextofreverserepurchase,interestratesofpolicytoolssuchasMLF,andthedomesticepidemicsituationwasatthemostseveremoment.TaoJin,aseniorexpertatSuningFinancialResearchInstitute,toldreportersthattheincidenceofdiseaseiswellundercontrolatthisstage,thesituationofresumingworkandresumingproductionhasimprovedsignificantly,andthespeedofeconomicrecoveryhasacceleratedatthesametime,andtheurgencyofLPRreductionseemsnotgreat.However,underthelong-termdownwardpressureoftheeconomy,LPRwillremainunchangedtemporarilyandwillincreasetheprobabilityoffutureinterestratecuts.PanHelin,ExecutiveDeanoftheDigitalEconomicsResearchInstituteofZhongnanUniversityofEconomicsandLaw,alsomentionedthatthefurtherdownturnofLPRatthisstagehaslimitedimpactonthemarket,butitwillintensifythepressureoncapitalcostsofcommercialbanks,becausetheformalconversionwillbeginonMarch1thisyear.ThestockfloatingrateloanpricingbenchmarkistoconverttheinterestratepricingmethodstipulatedintheoriginalcontracttoLPRasthepricingbenchmarkpluspoints.Thecurrentmarketstockinterestratescaleisabout15billionyuan.LPRconversiontakestime,andthemarginalutilityofthepolicywillbeweakenedwhentheLPRisreadjusted.Thepolicyeffectontherealeconomywillbemoreobviouswhenthecommercialbank’sinterestrateanchoringworkhasmoreprogressandthenguidetheLPRdownlink.Thepsychologicalimpactonhomebuyersistense.The150trillionstockloanthathasbeenanchoredsinceMarchalsoincludesmanypeoplepaying”bighead”mortgageseverymonth.Basedon1millionmortgagesandequalprincipalandinterestrepaymentfor30years,theLPRover5yearswillfallby5basispoints,andthemonthlypaymentwillbereducedby31yuan.PanHelinbelievesthatthecurrentinterestrateanchoringworkofcommercialbanksisparallelanchoring,otherwisethepreviousloaninterestrateis6%,andtheLPRover4yearsis4.75%,thenitbecomes(4.75+1.25%),whichmeansthattheinterestratehasnotchanged.TheconversionworkbeganonMarch1,andaftermoreprogresswasmadeintheanchoringwork,theeffectofloweringLPRontherealeconomywasbetter,sothecurrentimpactofLPRreductiononthemarketislimited,especiallyforstocks.ThenewloanshavebeenlinkedtoLPRsinceOctoberlastyear.ZhangDawei,chiefanalystofCentalineRealEstate,toldreportersthatotherinterestratecutshaveanimpactontheactualcostofhomepurchasesandhaveahugepsychologicalimpactonthem.Interestratecutsandquasi-ratecutswillbeconsideredbyhomebuyersasasloganforbuyingahouse.Withoutaratecut,thiseffectwillbeeliminated.Especiallywhentheinterestratewascutinrecentoverseascompetitions,thedomesticchoiceof”donotmove”isdefinitelybadnewsforthetruth.Inthecaseofagradualrecoveryofthemarket,theinterestratecutwillfailtoaffecttheconfidenceofrealestatebuyers.IntheviewofYanYuejin,researchdirectoroftheThinkTankCenterofE-HouseResearchInstitute,althoughtheLPRinterestrateitselfhasnotbeenadjusted,itisexpectedthattherecentactualmortgageinterestratesofcommercialbanksacrossthecountrywillbereduced.Somemilitarycommercialbankshavereceivedexternalattentiontoreducethedownpaymentratio,andtheadjustmentofthedownpaymentpolicyisfacingsomeresistance.Therefore,asfarasthecurrentfocusofcommercialbanksisconcerned,thedirectionofreducingloaninterestratesorrecentadjustments.Suchadjustmentsbenefitbothhomebuyers’mortgageloansanddevelopers’developmentloans,andgenerallyhelptoreducethecorrespondingcostsofhomebuyersandhousingcompanies.InterestratecutsandcomprehensiveRRRcutsareexpectedtobe”ontheroad”Thecurrentnewcoronarypneumoniaepidemicisrampantoverseas.Duetotheimpactoftheepidemicontheeconomy,sinceearlyMarch,morethan20countriessuchastheUnitedStates,Canada,NewZealand,Sweden,theUnitedKingdom,andEgypthaveannouncedinterestratecutsInmanycountries,assetpurchasesarealsocarriedoutsimultaneously.AlthoughMLFandLPRhavenotdeclinedinthelatestquotation,thereverserepurchaseoperationhasbeensuspendedfor24consecutivetradingdays,butintheglobalinterestratecuts,relevantpeoplegenerallysaidthatthegradualsizeofthemonetarypolicyspace,interestratecutsandcomprehensiveRRRcutsareexpectedto”ontheway”.TaoJinsaidthatinrecentyears,China’smonetarypolicyhasbeenreducedbytheimpactoftheglobalinterestratecuts,andhasmaintainedconstantpolicydeterminationandtimelydeterminationforalongtime.Asthewaveofinterestratecutsfurtherstrikes,Chinaislikelytobetheonlymajorcountryintheworldthatinsistsonresistingnegativeinterestrates.ItisalsomoreobviousthatChina’smonetarypolicyhasbeendecoupledfromothercountriestoacertainextent,butitalsomeanswhetheritisfromtheinterestratelevelorthereserverate.Intermsofaspects,developingcountrieshavealotofroomformonetarypolicy.Judgingfromdomesticfactorsthataffectwhetherinterestratesarecutornot,ithasalwaysbeenamajorconstraint.TheCPIfor2monthsisstillabove5%.WenBinsaidthatifthetrendovercomesthetail-liftingfactorandthestructuralfactorsoffoodpriceincrease,thegraduallevelwillremainrelativelyhigh.Therefore,duringthetransitionperiod,theincreaseinfoodpricesfellback,andthelevelgraduallyincreasedfurther.Theroomformonetarypolicyinvariouscountriesstillexists.Youcanfurtherreducethestandardandinterestrate,whichcanleadtoasteadydeclineinmarketinterestrates,andmoreimportantly,reducethefinancingcostoftherealeconomy.Intermsofthepaceandintensityofpolicyimplementation,PanandLinbelievethatcomparedwiththeone-timefloodingoftheUnitedStates,thereleaseofmultiplemonetarypoliciesismorepreciseandtheimplementationofthemonetarypolicyismoremoderate,andthesubsequentmonetarypolicyspacepenetrates.Initially,itwillcontinuetofurtherreducethefinancingcostoftherealeconomywhilemaintainingareasonableandsufficientliquidity.ThefuturemonetarypoliciesthatcanbeadoptedincludetargetedorcomprehensiveRRRcuts,OMOinterestratecuts,MLFandTMLFoperations,etc.Optimizingthe“three-grade,two-excellent”depositreserveratioframework,itisexpectedthattherewillbeatargetedorcomprehensiveRRRcutinthesecondquartertoenhancethecreditavailabilityofcommercialbanks.Inaddition,aftertheprogressofthecommercialbankloaninterestratereplacementanchorworkprogress,theextensioninthesecondhalfoftheyearmayexpandandguidethedownwardspeedofLPRandeffectivelyreducethefinancingcostoftherealeconomy.Itmayalsobepossibletolowerthedepositinterestratetolowerthebudgetfunds.Recently,ithasclearlyputforwardrequirementsforasignificantreductioninfutureloaninterestrates,guidingthebankingsystemtomakeappropriateprofitstotherealeconomyandreducingcorporatefinancingcosts.Inthiscontext,atleastthediscussiononwhethertolowerthebenchmarkinterestrateisalsoverylively.MengXiangjuansaidthatinviewofthereductioninthedebtendoffinancialinstitutions,itisstillpossibletoreducethedepositinterestrateinordertoguidethefinancingcostoftherealeconomydownward.TaoJinbelievesthatinthelongrun,thebasisforthecontinuedreductioninLPRisthereductionofthebenchmarkdepositratethatrepresentsalargercostreduction.Atthesametime,themarket-orientedreformofdepositswillcontinuetoadvance,andthereductionofdepositinterestratesshouldalsobemarket-basedItiscarriedoutthroughmarketmeansunderthereformframework.WenBinanalyzedthatcorporateandresidentialdepositsaccountedformorethan60%ofbankdebt.Ifyouwanttoreducethecostofphysicalfinancing,thenbankresistancecostsshouldbereduced.Loweringthebenchmarkinterestrateofdepositsisthefirstchoice.Toreducecoststhroughbanks,youcanuseLPRThenewmechanismcontinuestoguideLPRdown.PanHelinalsobelievesthatthepossibilityofreducingtheburdenonbanksbyloweringthedepositinterestrateisverylarge.Atpresent,thespreadsofcommercialbankshavecontinuedtoshrink.TheintroductionofLPRquotationshasnotbeenincreasedandreduced,whichalsoshowsthatcommercialbanksareunderpressuretonarrowthenetinterestmargin.Reluctanttolowerthequotedinterestrateanymore.Inthefuture,relevantpolicieswillgraduallybeintroducedtoreducethepressureoncommercialbanks’capitalcosts.Appropriatelyloweringthebenchmarkinterestrateofdepositstoeasethepressureofnarrowingthenetinterestmarginofcommercialbanks,providespaceforbankstoreduceloaninterestrates,andpromoteamarkeddeclineinLPRquotations.Sauna,YeWangChengWeimiaoEditorXuChaoLiWeijiaProofreadingLiShihui