Finance News on August 22 People's Bank of China authorized the National Interbank Offering Center to announce that on August 22, 2022 loan market quotation rate (LPR) is: the one-year loan market quotation rate (LPR) is reduced from 3.70% to 3.65%, and the five-year loan market quotation rate (LPR) is reduced from 4.45% to 4.3%. The above LPR is valid until the next release of the LPR.
According to calculations, if the commercial loan amount is 1 million yuan, the loan for 30 years, and the equal principal and interest repayment method, the LPR fell by 15 basis points this time, the monthly payment decreased by 88.48 yuan, and the cumulative monthly payment decreased by 31,800 yuan in 30 years. Previously, the central bank lowered the interest rate for first-home mortgages by 20 basis points. The interest rate cut effect after the LPR is lowered will be superimposed. The interest rate for first-home mortgages is as low as 4.1%, which is lower than 4.156% after the mortgage interest rate in 2009 was 30% discount.
Why does cut interest rates asymmetrically?
Yingda Securities Li Daxiao told the financial industry that it exceeded market expectations, especially the 5-year period. It can support the recovery of effective credit demand, reduce corporate financing costs, especially reduce personal consumption credit costs, enhance residents' willingness to consume, especially help the real estate market to recover and stabilize economic growth.
"After the implementation of LPR, the financing costs of the real economy can be effectively reduced, credit stimulus, and accelerated economic recovery." Mingming, chief economist of CITIC Securities, said that in the current situation where the demand for medium- and long-term loans for needs to be boosted, the subsequent "asymmetric downgrade" of LPR will be more in line with the current policy purpose, and will help banks to make more concessions to medium- and long-term loans and release medium- and long-term loans. After the reduction is implemented, it can effectively reduce the financing costs of the real economy, achieve credit stimulus, and help economic recovery.
As for why the interest rate cut is asymmetric? Wen Bin, chief economist at Minsheng Bank, believes that the current level of 3.7% of the 1-year LPR quotation is relatively low. If the 1-year LPR is continued to be lowered, it is easy to aggravate the arbitrage behavior of enterprises and increase the risk of idle capital. In comparison, in the current weak environment for housing-related loans, mortgage loan interest rates still have a lot of room for decline for LPR with more than 5 years. However, he also pointed out that if the subsequent economic recovery is less than expected, the recovery efforts of consumption, investment, etc. will continue to be weak, and the 1-year LPR interest rate will still have room for a reduction.
Mingming also stated that in the future, the central bank may continue to start with the marketization of deposit interest rates, and open up the space for LPR downgrade by further reducing the cost of bank liabilities, so as to achieve the goal of stimulating some financing needs of entities. Under such a background, deposit interest rates may further decline, reducing the liability cost pressure of commercial banks to a certain extent.
monetary easing is laid, how can the finance continue?
The macro team of China Securities said that the currency has fallen loosely, but the road ahead is still difficult. The central bank has recently lowered its policy interest rates, but facing the constraints of external tightening and the orientation of "not flooding", the road to continuous easing of domestic monetary policy is still difficult. The way and intensity of fiscal policy efforts may be more worthy of attention in the subsequent process of stabilizing growth.
The fiscal efforts are decisive, and there is overdrawal in the space. Compared with last year, the slow fiscal pace has been corrected this year. Although the decisive fiscal efforts in the first half of the year supported the rapid growth of infrastructure investment, they also brought about the problem of space overdraft. If the intensity of fiscal expenditure is difficult to maintain in the second half of the year, the sustainability of economic recovery is likely to be greatly reduced.
The tax refund scale doubles, and the release effect becomes weaker. Tax refunds, as an alternative means of tax reduction, have played an active role in helping enterprises alleviate their difficulties. Since the beginning of this year, more than 2 trillion yuan of retained tax refunds have been refunded to the taxpayer's account, more than three times that of last year. However, relatively speaking, the subsequent release of policy effects has weakened compared with the previous period, and the possibility of large-scale increase in tax refund and reduction policies is not high.
There is still a lot of room for quasi-financial protection. The actual path to filling the space for fiscal expenditure is to play the role of "quasi-financial" through policy bank . However, there is still a lot of room for policy bank credit support that had previously exceeded 1 trillion yuan compared with the expenditure intensity that needs to be maintained in the second half of the year.
Revitalize the limit space and supplement the gap in revenue and expenditure. The State Council’s Standing Committee mentioned that it is necessary to “revitalize the limit space of local special bonds in accordance with the law”, which is also one of the sources of funds for increased fiscal support in the second half of the year. This year, the limit space for special bonds has reached 1.55 trillion yuan. If this part of the funds can be fully revitalized and utilized later, it will basically be able to supplement the additional revenue and expenditure gap brought to the fiscal annual budget by the impact of the epidemic and other impacts.
After monetary easing, pay attention to fiscal continuation. After solving the source of funds, the expenditure side of the finance or broad government departments can make efforts again to maintain a high expenditure intensity like the first half of the year. After the LPR interest rate is lowered to echo the policy interest rate cut, it is necessary to pay attention to the continuation of fiscal policies.
