Since the beginning of this year, the central bank has taken three targeted downward adjustments (the third will be implemented on July 5), a one-time interest rate cut for small loans, and a series of measures to maintain liquidity, although it has not changed the direction of a stable and neutral monetary policy. However, in practice, it has become more neutral. On June 28, the second quarter communique of the regular meeting of the monetary policy committee issued by the Central Bank this year adjusted the previous policy statement, clearly changing the “reasonable stability of maintaining liquidity” that was repeatedly emphasized before to “maintaining reasonable and sufficient liquidity”. The author believes that the central bank's decisive adjustment of liquidity management objectives was originally intended to better enhance the capabilities of the financial services entity economy, stabilize market expectations and, of course, include capital market expectations. This is also the best interpretation of "one game of chess" in financial supervision.
For the fine-tuning of possible stable neutral monetary policy, I have analyzed this. For instance, the article “Actively responding to the steady and neutral monetary policy of economic changes at home and abroad” published in the Securities Daily on June 14 clearly stated that under the changes in the domestic and international economic situation, the central bank needs to adhere to monetary policy. While maintaining a stable neutral orientation, it can be more positive on specific operations to meet the reasonable demand for liquidity in various areas in China. Subsequently, the central bank announced on June 24 that it would support the market-based rule-of-law “debt-to-equity swaps” and the financing of small and micro enterprises through targeted reductions.
Another example is published in Securities Daily on June 25.The central bank has identified five major tasks.In one article, the central bank will probably use other backup or innovative tools besides continuing to adopt the standardization or targeted reduction policy as a standard monetary policy tool to actively and steadily advance the reform process in related fields. In the afternoon of the same day, the central bank, the China Banking Regulatory Commission and other five departments jointly issued the "Opinions on Further Deepening the Financial Services of Small and Micro Enterprises" and introduced measures to reduce the interest rate of small loans and other loans.
The reason why the above content was described in a painstaking manner was to explain that the central bank's adjustment of liquidity management objectives was not accidental, but that adjustments made based on the needs of the real economy and financial markets after a full review of the effectiveness of previous work were correct. The latest interpretation of a stable and neutral monetary policy.
In the second quarter regular meeting communique of the Monetary Policy Committee, there are some changes in wording in addition to the adjustment of liquidity management goals. For example, the total supply gate of money supply was adjusted from the previous "effective management" to "good management." This change directly creates the conditions for the realization of a new “reasonable and sufficient” liquidity management goal. Subsequently, if the real economy develops and the financial market stabilizes, all the tools in the central bank's monetary policy toolbox may be activated in a timely and appropriate manner, including those that have become standard (downgrading) and other liquidity management tools. Of course, price-type tools are also included.
In addition, compared to last year’s Monetary Policy Committee’s fourth quarter regular meeting communique (announced by the central bank in the first quarter of this year’s regular meeting), there are still some changes in this regular meeting, such as emphasizing “strengthening the situation and predictive adjustments”; While prudent monetary policy remains neutral, it should “tighten and moderate”; it should optimize the “effective control of macro leverage ratio” to “have a good grasp of structural deleveraging efforts and rhythm”; and increase “proactively and orderly expansion of financial externalities”. "Opening up and increasing the vigor and resilience of the financial industry".
In particular, the current regular meeting cancelled the expression of “increasing the proportion of direct financing” that had been emphasized before, and further emphasized “raising the financial capability of financial service entities”, and proposed to “stabilize market expectations”. The author believes that this change reflects the supervision of the capital market and has a positive effect on stabilizing market expectations. The capital market is a place of investment and financing for the service of the real economy. One-sided emphasis on its financing function is obviously not conducive to the steady development of the market.
When the A-share market fell sharply on June 19, the Governor of the Central Bank, Yi Gang, said in an interview that “China's capital market has conditions for healthy development. I am full of confidence.” The author believes that a stable and neutral monetary policy These fine-tunings are amused by the A-share market players and related parties, and have positive and significant implications for stabilizing market expectations and the stable development of the market.
On June 29, the A-share market responded to adjustments in liquidity management goals and other contents, resulting in a long-lost general increase. This may be the beginning of the counterattack of the A-share Jedi.
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