The second ＂interest rate cut＂ during the year released a positive policy signal.

　　On August 21st, the quoted interest rate (LPR) of the loan market ushered in the second decline in the year, and the one-year LPR decreased by 10 basis points compared with the previous period. Experts believe that LPR has declined twice in the past three months, and the countercyclical adjustment has been significantly strengthened, releasing positive policy signals, which will help promote the sustained economic recovery.

　　The decline of policy interest rate drives LPR down.

　　On the same day, the People’s Bank of China authorized the National Interbank Funding Center to announce that the one-year LPR was 3.45% and the one-year LPR was 4.2%. The 1-year LPR decreased by 10 basis points compared with the previous period, and the LPR over 5 years remained unchanged.

　　The market has expected this LPR decline. As an important reference for LPR quotation, the winning bid rate of MLF this month dropped by 15 basis points to 2.50%. In addition, on August 15th, the bid-winning interest rate in reverse repurchase operation, as well as the overnight, 7-day and 1-month standing lending convenience rates, all dropped by 10 basis points.

　　"Changes in the central bank’s policy interest rate will have a relatively direct impact on changes in LPR." Wen Bin, chief economist of China Minsheng Bank, believes that to expand consumption and investment demand, the loan interest rate still needs to be kept at a low level, and the decline of LPR will be transmitted to the actual loan interest rate of enterprises, which will help reduce the cost of credit financing.

　　Since the beginning of this year, the one-year LPR has dropped by 20 basis points. On June 20th, the LPR decreased for the first time this year, and the LPR for one year and over five years both decreased by 10 basis points.

　　In addition, since the beginning of this year, some banks have actively lowered the listing interest rate of some term deposits and simultaneously lowered the authorized upper limit of internal interest rates, and the cost of bank liabilities has continued to improve, which has also created room for the decline of LPR.

　　The relevant person in charge of the People’s Bank of China said earlier that while giving full play to the effectiveness of LPR reform, it is necessary to continue to play an important role in the market-oriented adjustment mechanism of deposit interest rates, support banks to reasonably control the cost of liabilities, and enhance the ability of finance to continuously support the real economy.

　　Interest rate is an important macroeconomic variable. Experts believe that cutting interest rates twice within three months has released a policy signal to increase counter-cyclical adjustment and stabilize market expectations. Wang Qing, chief macro analyst of Oriental Jincheng, believes that the one-year LPR decline will guide the financing costs of enterprises and residents to continue to decline, thus boosting the kinetic energy of consumption and investment and accumulating strength for the sustained economic recovery.

　　Reducing financing cost and stimulating enterprise kinetic energy

　　Yan Xudong, general manager of Fujian Dehua Yousheng Ceramics Co., was very happy when he heard the good news that LPR dropped again: "We just received a batch of new orders for daily-use ceramics from Japan. If we can get lower-cost funds, it will help us further reduce financial costs and purchase raw materials in time for production."

　　Yan Xudong told reporters that at the end of July, the company obtained a loan of 10 million yuan from CCB and enjoyed the benefits brought by the decline of LPR in June. The loan interest rate was reduced from 3.8% to 3.4%, saving financial costs of over 40,000 yuan.

　　Qiu Shibin, head of inclusive finance Business Department of Fujian Branch of China Construction Bank, said that after each LPR adjustment, the bank will actively meet the financing needs of enterprises and adjust the financing plan according to the latest market conditions. In July, Fujian Branch of China Construction Bank issued 13.7 billion yuan of new corporate loans, with a weighted average interest rate of 3.31%, down 0.26 percentage points year-on-year, which was at the bank’s historical low.

　　The downward trend of LPR has obvious influence on the interest rate of new loans. The weighted average interest rate of new loans in June was 4.19%, down 0.22 percentage points year-on-year. Recently, the second quarter monetary policy implementation report of China released by the People’s Bank of China showed that the weighted average interest rate of loans remained at a historically low level. In June, loans with interest rates lower than LPR accounted for 37.74% of the general loans.

　　At present, the endogenous power of the economy needs to be strengthened, and the recovery of credit demand needs urgent support. Data show that RMB loans in China increased by 345.9 billion yuan in July, a year-on-year decrease of 349.8 billion yuan.

　　Dong Ximiao, chief researcher of Zhaolian, believes that the credit fluctuated obviously in July, reflecting that the foundation of economic recovery is still unstable and the financing demand of the real economy needs to be boosted. In this case, it is necessary and urgent to moderately reduce the interest rates of various policy instruments and guide the LPR to continue to decline. With the continuous decline of credit interest rates of enterprises and residents, the financing demand of the real economy may rise, and the pace of bank credit supply will also accelerate.

　　Enhance the sustainability of supporting the real economy.

　　This time, the LPR has undergone asymmetric adjustment, which is different from the decline of the one-year LPR. The LPR over five years is "not moving".

　　Dong Ximiao believes that keeping the LPR unchanged for more than five years will help commercial banks stabilize the interest margin level and enhance the stability of supporting the sustainability of the real economy and the high-quality development of services. At the same time, commercial banks should face up to the problem of excessive spread between existing mortgage and new mortgage, and accelerate the introduction of interest rate adjustment plan for existing mortgage.

　　The financial management department jointly held a video conference on the 18th of this month, pointing out that the financial support for the real economy should be strong enough, the pace should be stable, the structure should be excellent and the price should be sustainable. It is necessary to continue to promote the steady decline of financing costs in the real economy, standardize the pricing order of loan interest rates, and make overall consideration of the relationship between increment, stock and other financial product prices.

　　Since the beginning of this year, the People’s Bank of China has continuously optimized and adjusted its real estate financial policies to support the rigid and improved demand for house purchase. In particular, the dynamic adjustment mechanism of the first set of housing loan interest rate policy accelerated, which led to the reduction of mortgage interest rates in many places.

　　The report on the implementation of China’s monetary policy in the second quarter shows that at the end of June, 87 cities have lowered the lower limit of the first home loan interest rate, which is 10 to 40 basis points lower than the national lower limit, and 13 cities have cancelled the lower limit of the first home loan interest rate. In June, the new personal mortgage interest rate was 4.11%, down 0.51 percentage points year-on-year.

　　Wen Bin believes that the interest rate of newly issued housing loans has fallen sharply, and residents’ investment and asset allocation have also changed. Lowering the interest rate of existing mortgage loans will help reduce residents’ early repayment and illegal "lending" behavior and standardize market order.

　　The relevant person in charge of the People’s Bank of China said that it is necessary to grasp the interest rate level scientifically and reasonably. According to the economic and financial situation and the needs of macro-control, counter-cyclical adjustment should be done in a timely and appropriate manner, and the balance between growth and risk, internal and external should be grasped, so as to prevent arbitrage and idling of funds, improve the efficiency of policy transmission and enhance the stability of bank operations.

　

　　Reporter Wu Yu, Liu Yujia