The Bank of China announced a RRR cut.
China news agency, Beijing, September 24 (Reporter Pang Wuji) Pan Gongsheng, governor of the Bank of China, announced in Beijing on the 24th that he would reduce the deposit reserve ratio and the policy interest rate.
On September 24th, China the State Council Press Office held a press conference in Beijing. Pan Gongsheng, Governor of the People’s Bank of China, Li Yunze, Director of the State Financial Supervision and Administration, and Wu Qing, Chairman of the China Securities Regulatory Commission introduced the financial support for high-quality economic development and answered questions from reporters. China News Service reporter Han Haidan photo
On September 24th, China the State Council Press Office held a press conference in Beijing. Pan Gongsheng, Governor of the People’s Bank of China, Li Yunze, Director of the State Financial Supervision and Administration, and Wu Qing, Chairman of the China Securities Regulatory Commission introduced the financial support for high-quality economic development and answered questions from reporters. China News Service reporter Han Haidan photo
On the same day, Pan Gongsheng announced a series of major monetary policy adjustments at the press conference held by the State Council Press Office.
He said that the deposit reserve ratio will be lowered by 0.5 percentage points in the near future, providing long-term liquidity to the financial market of about 1 trillion yuan; Depending on the market liquidity, the deposit reserve ratio will be further lowered by 0.25 to 0.5 percentage points during the year.
Pan Gongsheng explained that at present, the weighted average deposit reserve ratio of financial institutions is 7%. Among them, large banks are currently 8.5%, and will drop to 8% after the RRR cut; Medium-sized banks are currently 6.5%, and will drop to 6% after the RRR cut. Rural financial institutions have implemented a deposit reserve ratio of 5% several years ago, and this time it is not in the scope of adjustment.
Pan Gongsheng said that after the implementation of the RRR cut policy, the average deposit reserve ratio of the banking industry is about 6.6%, which still has some room compared with major international economies.
In terms of interest rate, Pan Gongsheng said that the policy interest rate of the central bank should be lowered, that is, the operating interest rate of 7-day reverse repurchase should be lowered by 0.2 percentage point, from the current 1.7% to 1.5%, and at the same time, the loan market quotation rate (LPR) and deposit interest rate should be guided to go down simultaneously to keep the net interest margin of commercial banks stable. Under the market-oriented interest rate control mechanism, the adjustment of policy interest rate will drive the adjustment of benchmark interest rates in various markets. It is estimated that after the adjustment of the policy interest rate, the medium-term loan facility (MLF) interest rate will be lowered by about 0.3 percentage points, and the loan market quotation rate (LPR) and deposit interest rate will also be lowered by 0.2 to 0.25 percentage points.
Pan Gongsheng pointed out that the impact of this interest rate adjustment on the bank’s net interest margin is generally neutral. After several rounds of quantitative analysis and evaluation, the technical team of the Bank of China believes that the net interest margin of banks will remain basically stable. (End)
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