China cut interest rates again! Short-term SLF interest rate following the People’s 銀 MLF ↓

[베이징=뉴스핌] Correspondent Choi Heon-gyu = The People’s Bank of China, the central bank of China, lowered the interest rate on liquidity-adjusted loans (SLF) for policy and commercial banks on the 21st.

On the afternoon of the 21st, the People’s Bank of China lowered the SLF rate by 10 BP (0.01 percentage points for 1 BP) for call, 7-day, and 1-month contracts. SLF is a system in which the People’s Bank of China provides short-term short-term loans to policy banks and commercial banks.

Financial experts say that this SLF rate cut is the fourth day after lowering the medium-term liquidity support window (MLF) rate and the open market manipulation RP rate on January 17, and the People’s Bank of China has a strong will to cut the cost of funds (interest rate cut). has been reconfirmed.

The People’s Bank of China lowered the SLF call rate on the 21st to 2.95%, the 7-day rate to 3.10%, and the 1-month rate to 3.45%, 10BP each compared to December 2021.

Experts diagnosed that the SLF rate cut would reduce market interest rate fluctuations and lower the price of funds by lowering the upper limit of the loan interest rate band to narrow the difference between the upper and lower interest rates.

The SLF is a loan system introduced by the People’s Bank of China in 2013 as a means of adjusting monetary liquidity to respond to temporary shortages of financial institutions (policy banks and commercial banks).

[베이징=뉴스핌] Correspondent Heon-gyu Choi = 2022.01.22 [email protected]

The main interest rates that China uses as a means of monetary policy are open market manipulation (OMO) rates such as RP, interest rate bands, medium-term liquidity support windows (MLFs), loan preferential rates (LPR), which are the base rates, reserve reserve rates, and Shanghai interbank rates. (Shibor, Shibo interest rate), etc.

Among them, MLF is a system that lends short-term funds to commercial banks. On January 17, the People’s Bank of China lowered the interest rate by 10BP to 2.85% while implementing the MLF of 700 billion yuan. On the same day, the People’s Bank of China also lowered the interest rate by 10 BP to 2.10% while performing a reverse RP operation of 100 billion yuan.

Then, on January 20, the People’s Bank of China lowered the 1-year LPR and the 5-year LPR to 3.7% and 4.6%, respectively, by 10BP and 5BP. The People’s Bank of China announces the LPR rate by averaging the rates reported by 18 commercial banks at 9:15 am on the 20th of every month.

In relation to the SLF rate cut implemented on the 21st, an economist at Zhongxin Securities in China explained that it is a follow-up measure to the MLF and open market operation rate (OMO) cuts and is in line with market expectations.

Financial experts predicted that the People’s Bank of China will try to stabilize the total amount of funds in the real market by opening up credit channels, saying that the People’s Bank of China is making it clear that it will use monetary policy measures as much as possible to prevent downward pressure on the economy.

Experts said that it is unlikely that the policy rate will be cut further for the time being in a situation where the US interest rate hike is expected. The market generally expects the People’s Bank of China to cut the reserve requirement ratio once in the first quarter of 2022.

Beijing = Correspondent Choi Heon-gyu [email protected]



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