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Original title: Why did the central bank discontinue this year’s practice this time when it launched 200 billion MLF operations on the last day of November?
Each reporter Song Ge Each reporter intern Xiao Shiqing Each publisher Yi Qijiang
On November 30, the People’s Bank of China announced that, in order to maintain stable liquidity at the end of the month, it will conduct a 200 billion yuan 1-year medium-term loan (MLF) and buyback operation 7-day reverse of 150 billion yuan, with interest rates of 2.95% and 2.2 respectively. %.
It is worth noting that since the beginning of this year, the central bank has established the practice of conducting MLF operations on the 15th of each month (postponed on holidays). And on the last day of November, the central bank broke the convention and accidentally invested 200 billion yuan in “hot powder”.
CITIC Securities chief fixed income analyst clearly believes, “The central bank’s new 200 billion yuan MLF on November 30 exceeded market expectations. On the one hand, it is to protect the liquidity environment at the end of the month. and at the beginning of the month and stabilize the fluctuation of DR007. The debt shortage and the return of interest rates on interbank deposits to the operating interest rate of the MLF. The impact of previous events of credit default on liquidity, requirements of the Financial Stability Committee for the smooth functioning of the bond market and abnormal transactions in the foreign exchange repo market last week, maintaining monetary policy The intention to stabilize liquidity has been strengthened. “
Expert analysis highlighted that the implementation of the MLF operation may be considered early to ease the squeeze on funds on 7 December.The MLF operation breaks the conventions at the end of the month
On November 30, the central bank announced that it will conduct a one-year 200 billion yuan MLF operation and the interest rate will remain at 2.95%. On the same day, a 7-day reverse repurchase operation for 150 billion yuan was carried out and the interest rate remained at 2.2%. Due to the 40 billion reverse repurchase maturity on that day, a net investment of 310 billion yuan was made in just one day.
Unlike in the past, the central bank made two MLF deals in November, unusually choosing the month-end node, which surprised the market.
Obviously, on the one hand, DR007 has always been above 2.2% at the end of the month since November 24, and has maintained an uptrend. The new MLF is to keep liquidity stable at the end of the month; on the other hand there will be 3,000 on 7 December. 100 million yuan MLF expiration and December 7 is also the bank payment due date, so the new MLF can be considered early to facilitate the funds squeeze on December 7, reducing the overlap of MLF due and date due date of the bank payment to the market. The impact.
The “Daily Business News” reporter noted that in the previously released “Quarterly Monetary Policy Implementation Report”, the central bank pointed out that it further strengthened the market by disclosing the MLF operating plan for the month in advance in the “Open Market Business Transaction Announcement “. Communication, improve the transparency of monetary policy and effectively stabilize market expectations.
Mingming said: “Since 2020, the central bank has only operated MLFs around the 15th of each month, strengthening its leadership position for LPR quotes. year and MLF is once again used as the base currency. Delivery instruments are used. On the other hand, the Third Quarter Monetary Policy Implementation Report once again proposed to “build a modern central bank system. and improve the money supply control mechanism. “Against the backdrop of maintaining the normal monetary policy space, subsequent monetary policy substantially reduces RRR and interest rates The operation will be more cautious, the base currency will be more supported from the reverse repurchase and MLF operations and subsequent irregular MLF operations will return gradually. “
Irregular or more common operations follow-up
The reporter noted that the central bank pointed out in the previous “Second Quarter Monetary Policy Implementation Report” that the MLF interest rate, as a medium-term policy interest rate, is the focus of the rate operation. of medium-term market interest. Market interest rates such as the government bond yield curve and interbank certificates of deposit fluctuate around the MLF interest rate. According to Wind data, the one-year interbank certificate of deposit interest rate recently exceeded 3.35%, which is about 40 basis points higher than the one-year MLF interest rate.
He obviously pointed out that the central bank has continuously renewed the MLF since August, which complements the bank’s medium-term liquidity and also focuses on relieving continued pressure on the bank’s debt. Since September, the interest rate for the issuance of the one-year AAA interbank certificate of deposit has rapidly risen to the one-year MLF against the backdrop of the low excess reserve rate, driven by the drop in pressure of structural deposits, from the centralized government bonds and the slow pace of fiscal spending. The operating interest rate is above 2.95%, and the recent one-year interbank certificate of deposit issuance rate of joint-stock banks reached 3.38%. The obvious deviation between the interbank deposit interest rate and the MLF operational interest rate far exceeded the law of the central bank’s second quarter monetary policy implementation report that the interbank deposit interest rate revolves around the interest rate of the MLF and will also affect the interest rate commercialization process and the stability of the interest rate transmission mechanism. Sex.
In addition, he also pointed out that the weighted average interest rate of RMB loans and the weighted average interest rate of general loans of financial institutions increased in the third quarter and the pressure on bank liabilities was passed on to interest rates on loans. Under the triple contradiction of continuing to put pressure on structural deposits, keeping interbank certificates of deposit and MLF spreads within a reasonable and stable range, and keeping interest rates on loans relatively stable, the central bank manipulates the MLF to relieve the pressure. on bank liabilities and guide the return of interest rates on certificates of deposit to MLF rates. The one-year AAA interbank certificate of deposit issuance rate is also expected to peak.
“In the second half of the year, tight balance of funds and strong pressure on bank liabilities became the market theme. Market sentiment has always been suppressed by the high interest rate of interbank certificates of deposit. A at the end of November, in the face of fiscal expenses, the trend in interest rates for the issuance of interbank certificates of deposit has increased for a while. The MLF operation has a signal significance and subsequent irregular MLF operations will be The pressure on bank liabilities and the upward pressure on interest rates on interbank deposits will also be eased against the backdrop of active central bank intervention and accelerating fiscal spending. The current ten-year public debt has reached the future rate of return has reached around 3.3%, the safety margin is outstanding and the value of the configuration is obvious, ”Mingming said.
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