A few days ago, the central bank governor Yi Gang was in a firm interview with the media.currencyThe “metrics” of the policy were explained and a clear signal was released to the market. Overall, this year's prudent monetary policy requires both “degree” and “quantity”. The author believes that the current currency regulation is not only about "measures", but also about a "balance". This is an important prerequisite for reading the "measure" of Yi Gang.
What is the “balance” of sound monetary policy? The author believes that it means that the initial policy of monetary policy to serve the real economy and prevent financial risks cannot be changed, and it must be implemented consistently.
Last year, the three major battles started well, but we must also see that the economic operation is stable and volatile, the external environment is complicated and severe, and the economy is facing downward pressure. Under such an international and domestic situation, monetary policy must "targetedly and actively guide market expectations."
Monetary policy services The real economy must adhere to countercyclical adjustment. Therefore, Yi Gang said that (last year) financial support for the real economy did not weaken as the economic growth rate declined, but instead increased support, reflecting the adjustment of counter-cyclical.
This year's economic situation is even more severe, so the central bank will put more emphasis on counter-cyclical adjustment, and various precise drip irrigation measures will be launched in due course.
In order to prevent financial risks, the Central Economic Work Conference not only emphasizes the need to prevent and resolve major risks, but also clearly adheres to the basic ideas of structural de-leverage to prevent abnormal fluctuations and resonance in financial markets.
Yi Gang’s explanation is that the prevention and resolution of financial risks should serve the main line of supply-side structural reform, adhere to the overall tone of work for stability, and take into account the changes in the macroeconomic situation and balance the development between development and risk prevention. The relationship is resolutely set aside to prevent and resolve major risks.
By clarifying the "balance" of the prudent monetary policy, we can better understand the "measurement" of Yi Gang.
Yi Gang said that the moderate degree of stable monetary policy is mainly reflected in the reasonable total amount, the optimization of structure, and the creation of a suitable monetary and financial environment for supply-side structural reform and high-quality development.
Furthermore, the "degree" of monetary policy is to meet the needs of further improving and unblocking the transmission mechanism of monetary policy. Under the situation of greater downward pressure on the economy, a stable monetary policy should be significantly more positive. Since the beginning of this year, the central bank has expanded the scope of Pratt & Whitney's financial downgrade and lowered the standard by 1 percentage point, which reflects this policy.
With the adjustment of the “degree” of monetary policy, its “quantity” will naturally change accordingly. The expansion of the “quantity” of monetary policy needs to grasp three principles. One is to avoid excessive credit contraction and impact on the real economy, and to avoid “big water flooding” affecting structural de-leverage; the other is to ensure accurate drip irrigation. At the same time, the amount of money is moderate, and the effort to enhance the vitality of the micro-market entities; another is to maintain a certain amount of "quantity", which helps to unblock the transmission mechanism of monetary policy.
The industry expects that the central bank will not only have a 1 percentage point reduction in two implementations, but also implement the first targeted medium-term loan facility (TMLF) operation in late January. If the real economy, supply-side structural reforms, and risk prevention are indeed needed, the central bank will It is highly probable that the RRR will be implemented once a quarter, with the use of other monetary policy tools. Overall, this year's liquidity continues to be reasonably abundant and not a problem.
In an article this year, the author emphasizes that the stable monetary policy in 2019 will switch from the previous run to the lead mode. “Consolidation, enhancement, promotion and smooth flow” is the new requirement of the central government for the supply-side structural reform. The monetary policy transmission mechanism also needs to implement this policy. For investors, reading the “measures” of Yi Gang helps to make the right investment decisions.
Analysis and interpretation >>
(Article source: Securities Daily)