The Chinese central bank's policy arsenal
BEIJING, Aug 30 (Reuters) -The People's Bank of China (PBOC) aims to create a more market-driven interest rate curve and move away from quantitative policy tools to help wean the economy off state-directed bank lending.
Here is a rundown of its key interest rates and policy tools.
INTEREST RATES
* Reverse repo rates – at which the PBOC purchases government bonds from commercial banks in open market operations, with an agreement to sell them back in the future, thereby providing banks with short-term liquidity. On July 22, the PBOC cut the seven-day reverse repo rate CN7DRRP=PBOC by 10 basis points (bps) to 1.7% and has kept it steady since.
This rate has become the PBOC's main policy rate. The central bank uses an interest rate corridor made of temporary overnight repos and reverse repos to guide interbank rates to fluctuate around the benchmark.
* Loan prime rates (LPR) - the benchmark lending rates that are based on quotes from 20 commercial banks. The PBOC has pledged to improve the quality of the LPR to better reflect actual borrowing costs.
On July 22, the PBOC cut the one-year LPR CNYLPR1Y=CFXS, linked to regular consumer loans, by 10 bps to 3.35% and cut five-year rate CNYLPR5Y=, linked to mortgages, by the same margin to 3.85%.
* Medium-term lending facility (MLF) rate was the previous benchmark policy rate. It is the rate at which banks can borrow from the PBOC for one year. The one-year rate CNMLF1YRRP=PBOC stands at 2.3%.
At the end of June, outstanding funding through MLF stood at 7.07 trillion yuan ($994.6 billion) - approximately 5.6% of GDP.
* Standing loan facility (SLF) rate - for short-term loans to commercial banks. Use of the SLF is low. The seven-day SLF rate is at 2.7%.
* Interest rate on excess reserves – which banks receive for depositing surplus cash at the central bank. It stands at 0.35%.
QUANTITATIVE TOOLS
* Reserve Requirement Ratio (RRR) - the amount of cash banks need to keep as reserves with the central bank.
The PBOC has cut the weighted average RRR from nearly 15% in 2018 to around 7%, pumping more than 12 trillion yuan into the economy.
* Open market operations (OMO) - the PBOC mainly conducts OMO via short-term repo and reverse repo operations to manage market liquidity.
* Structural tools - the PBOC has in recent years expanded its basket of structural policy tools, including relending facilities and other low-cost loans, as it seeks to provide long-term support for some key sectors, including tech innovation, carbon reduction and affordable housing.
For example, the Pledged Supplementary Lending (PSL) facility, launched in 2014, provides long-term funding for government infrastructure and urban redevelopment - a form of property market support.
In May, the PBOC launched a 300 billion yuan relending programme to facilitate up to 500 billion yuan in funding for state-owned firms to buy empty apartments and turn them into affordable housing.
Outstanding structural monetary policy tools stood at 7.03 trillion yuan at the end of June, including 2.82 trillion through the PSL.
($1 = 7.1086 Chinese yuan)
ANALYSIS-China's interest rate reform will be 'arduous, long' process nL8N3KF028
Reporting by Kevin Yao; Editing by Marius Zaharia and Jacqueline Wong
Dernières actualités
Avertissement : Les entités de XM Group proposent à notre plateforme de trading en ligne un service d'exécution uniquement, autorisant une personne à consulter et/ou à utiliser le contenu disponible sur ou via le site internet, qui n'a pas pour but de modifier ou d'élargir cette situation. De tels accès et utilisation sont toujours soumis aux : (i) Conditions générales ; (ii) Avertissements sur les risques et (iii) Avertissement complet. Un tel contenu n'est par conséquent fourni que pour information générale. En particulier, sachez que les contenus de notre plateforme de trading en ligne ne sont ni une sollicitation ni une offre de participation à toute transaction sur les marchés financiers. Le trading sur les marchés financiers implique un niveau significatif de risques pour votre capital.
Tout le matériel publié dans notre Centre de trading en ligne est destiné à des fins de formation / d'information uniquement et ne contient pas – et ne doit pas être considéré comme contenant – des conseils et recommandations en matière de finance, de fiscalité des investissements ou de trading, ou un enregistrement de nos prix de trading ou une offre, une sollicitation, une transaction à propos de tout instrument financier ou bien des promotions financières non sollicitées à votre égard.
Tout contenu tiers, de même que le contenu préparé par XM, tels que les opinions, actualités, études, analyses, prix, autres informations ou liens vers des sites tiers contenus sur ce site internet sont fournis "tels quels", comme commentaires généraux sur le marché et ne constituent pas des conseils en investissement. Dans la mesure où tout contenu est considéré comme de la recherche en investissement, vous devez noter et accepter que le contenu n'a pas été conçu ni préparé conformément aux exigences légales visant à promouvoir l'indépendance de la recherche en investissement et, en tant que tel, il serait considéré comme une communication marketing selon les lois et réglementations applicables. Veuillez vous assurer que vous avez lu et compris notre Avis sur la recherche en investissement non indépendante et notre avertissement sur les risques concernant les informations susdites, qui peuvent consultés ici.