The highest in history! For 4 consecutive days, the central bank did the same thing

According to the website of the People’s Bank of China, in order to maintain reasonable and sufficient liquidity in the banking system, the People’s Bank of China launched a 7-day reverse repurchase operation of 2 billion yuan in the form of interest rate bidding on January 6, 2023, and the winning bid rate was 2.00%. Since 386 billion yuan of reverse repos expired that day, the open market realized a net withdrawal of 384 billion yuan. This is the fourth consecutive day that the People’s Bank of China has made net withdrawals from the open market. The central bank’s net withdrawal of funds this week was 1,601 billion yuan, a record high in a single week. Industry experts said that the central bank’s move is a corresponding hedging and natural recovery of the large amount of liquidity at the end of 2022. It is expected that the People’s Bank of China will continue to carry out flexible and precise regulation according to changes in liquidity supply and demand and market interest rates at various points in time. | Related reading (China Securities Journal)

Meng Xuanhe

The Central Economic Work Conference held at the end of last year has set the tone for this year’s monetary policy, that is, “a prudent monetary policy must be precise and powerful. Liquidity must be maintained at a reasonable and sufficient level, and the growth rate of broad money supply and social financing scale shall be kept at the same rate as nominal economic growth.” Speed ​​Basic Match”.

Under this premise, the monetary policy for this year is basically determined. It can be predicted that there is still room for the base interest rate LPR to be lowered, and the money supply and financing scale will grow faster than last year. This year is the first year after the epidemic control was lifted, and economic development has become the top priority, and the growth rate is much faster than last year.

When global inflation is still high, I am also a little worried whether such easing will boost domestic inflation. The real estate sector is basically very relaxed now, and down payment and interest rate reductions have been continuously implemented. The fine-tuning operation through the open market is probably an important tool for the central bank this year, which can regulate market liquidity and expectations without changing the general tone.

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