China News Network Client, Beijing, December 20 (Yao Lu) On the 19th, the Federal Reserve and the People's Bank of China, which are in charge of monetary policy in the United States and China, took action.
The Federal Reserve announced its fourth interest rate hike this year, raising 25 basis points; the People's Bank of China has targeted interest rate cuts and announced the creation of a new monetary policy tool, Targeted Medium-Terminal Lending Facility (TMLF).
Data map: On December 19 local time, the Federal Reserve announced that it would raise the federal funds rate by 25 basis points to the level of 2.25% to 2.5%. The picture shows Federal Reserve Chairman Powell attending the press conference that day and answering reporters' questions. China News Service reporter Chen Mengtong photographed
rare
If one word is used to describe this wave of operations by the central banks of China and the United States, it is "rare".
The Fed's interest rate hike is the ninth rate hike since the launch of the interest rate hike cycle in December 2015, and the first time since 1994 when facing a decline in the stock market.
Another phenomenon that has attracted much attention is that US President Trump is rejected in his heart about the successive rate hikes of the Federal Reserve. Before the Fed raised interest rates, Trump broke the rules and frequently put pressure on the Fed.
On the 17th local time in the United States, Trump issued a tweet bluntly saying that the Fed's consideration of hiking interest rates again is "unbelievable" and hopes to "stop when it's good." Last week, Trump had called on the Fed not to raise interest rates in two interviews with the media. "The US economy is recovering, and the current interest rate level is already in the normal range. I don't want to see a rate hike again."
Although he was constantly criticized by Trump, the Federal Reserve still announced a rate hike on the 19th. The Federal Reserve said the U.S. economic growth momentum was strong and the job market continued to improve, pointing out that "some" of further steady rate hikes are needed.
Just a few hours before the Fed announced a rate hike, the People's Bank of China had carried out a rare wave of operations to appease the market.
19 On the afternoon of the afternoon of the 19th, after the closing of in China's A shares, the People's Bank of China first issued an announcement of less than 100 words, saying that it has invested a total of 400 billion yuan this week, maintaining a reasonable level of market liquidity, the total liquidity of the banking system has risen, and the market interest rate trend is stable.
Then, the People's Bank of China threw out a bigger news, "targeted interest rate cuts."
sets the medium-term lending facility (TMLF), which targeted support for financial institutions to issue loans to small and micro enterprises and private enterprises; the funds can be used for three years, and the interest rate is 15 basis points compared with the medium-term lending facility (MLF) commonly used by the People's Bank of China.
Data picture: People's Bank of China. Photo by Yang Mingjing, China News Service. Source of Photo: CNSPHOTO
signal
In the past, when the Federal Reserve raised interest rates, most countries or regions generally followed the interest rate hike, otherwise they would face the pressure of exchange rate depreciation.
After the Federal Reserve's interest rate hike, Saudi Arabia, Bahrain , UAE, Hong Kong, etc. have announced a 25 basis point rate hike in response to the US rate hike.
Before the Fed raises interest rates, the People's Bank of China conducted reverse operations in advance. In the eyes of many financial analysts, the direction of monetary policy between the Federal Reserve and the People's Bank of China is getting further and further away.
Some analysts pointed out that the central bank can do this because China's huge foreign exchange reserves and its capital accounts have not been fully liberalized. Even if the United States raises interest rates, the pressure on RMB depreciation is still under control. Judging from the current Chinese economy and stock market conditions, China is likely to not follow the interest rate hike.
In fact, in the face of the Fed's interest rate hike, this is not the first time that the People's Bank of China has chosen to remain silent.
In June and September 2018, when the Federal Reserve raised interest rates for the second and third time this year, the People's Bank of China kept the operating interest rates unchanged and did not follow. In addition, the Federal Reserve raised interest rates in the first three months, while the People's Bank of China raised the winning rate of reverse repurchase operation (OMO) and the winning rate of medium-term lending facility (MLF).
Regarding the operations of the People's Bank of China on the evening of the 19th, Qianhai Kaiyuan chief economist Yang Delong believes that this is a new option between not cutting interest rates and comprehensive interest rate cuts, further increasing liquidity injections, reflecting the flexibility of the People's Bank of China's monetary policy and the independence of operations, and will not be affected too much by the Federal Reserve's interest rate hike.
Data picture: US President Trump
Different
Different monetary policy orientations are different target needs.
Recently, the People's Bank of China has frequently taken action to release liquidity to the market. A direct demand is that China has entered the "tight money" time zone at the end of the year, and it is necessary to invest a large amount of liquidity to hedge against the traditional tightening of liquidity.
Industry Bank Chief economist Lu Zhengwei said that policies such as the People's Bank of China's "targeted interest rate cuts" will reduce capital costs, help qualified banks increase liquidity and increase banks to support lending by small and micro enterprises.
Ming Ming, deputy director of CITIC Securities Research Institute, analyzed that the People's Bank of China has sent out a signal of reasonable liquidity at this time, indicating that the orientation of monetary policy easing remains unchanged and the domestic economy is still the priority. Considering the pressure faced by the economy, a rate cut can still be expected next year.
After the "targeted interest rate cut", will China's space for lowering the reserve requirement ratio in the future?
There are differences in the predictions of this analysis institutions, but analysts hold a similar view: as the Spring Festival approaches, the central bank will continue to increase open market operations, including the multi-term reverse repurchase combination to inject liquidity.
is different from China. Although concerns that the U.S. economy may peak has led to a continued sharp drop in U.S. stocks, Fed officials believe that the U.S. economic growth rate has exceeded its sustainable rate and have been raising interest rates to reduce the role of monetary policy in the economy.
Now, it is worrying that the fiscal support recession brought by Trump’s executive spending and the $1.5 trillion tax cut bill, and the global economic slowdown, may put the U.S. economy into a period of volatility.
ICBC International believes that the US economic cycle will reach a turning point in 2019. By mid-2019, the target range of the Federal Reserve's policy interest rate will likely reach a long-term neutral level (3%), and the room for interest rate hikes will narrow.
The Federal Reserve has hinted that the currency tightening cycle is coming to an end in the face of financial market volatility and a global economic slowdown, and interest rate hikes are expected to drop to two next year.
US media commented that the Fed's interest rate hike process is still more radical than market expectations. Before the policy meeting begins, U.S. interest rate futures traders believe that the Fed will raise interest rates no more than once next year.
RMB data picture China News Network reporter Jin Shuo
affects
For many people, whether it is the Fed's interest rate hike or the People's Bank of China's interest rate cut, the first time they are directly affected by investors in the financial market.
htmlOn 19, before the Federal Reserve announced the interest rate hike, the three major U.S. stock indexes rose by more than 1%. After the interest rate hike resolution was announced, the three major U.S. stock indexes turned around and fell sharply. The Dow Jones Index once fell "cliff-like" during the session! The yield on the 10-year U.S. Treasury bonds fluctuated and fell, and gold also showed a plunge.As of the close of the 19th, the Dow Jones Industrial Average fell 1.49% to 23,323.66 points, a new closing low since November 2017. The S&P 500 fell 1.54% to 2506.96 points. The Nasdaq Composite Index fell 2.17% to 6636.83 points.
htmlOn the 20th, affected by the US interest rate hike and the decline in US stocks, major stock indexes in the Asia-Pacific stock market opened and fell. As of press time, the Nikkei 225 index's afternoon decline expanded to 3%, while the TSE index fell nearly 2.5%.The mid-price of RMB exchange rate against the US dollar was 6.8936 yuan on the 20th, a 67 basis points lowered. Onshore and offshore RMB fell below the 6.91 mark against the US dollar, and the offshore RMB fell by nearly 100 basis points from its intraday high. In terms of
A shares, the Shanghai Composite Index opened at 2544.51 points, down 0.20%; the Shenzhen Component Index opened at 7402.20 points, down 0.22%. ChiNext Index opened at 1266.76 points, down 0.16%. Subsequently, the trends of the Shanghai and Shenzhen stock markets diverged. By the closing of the afternoon, the Shanghai Composite Index fell 0.82%, the Shenzhen Component Index fell 0.27%, and the ChiNext Index rebounded and turned red, rising 0.13%.
On the news front, the CSRC stated that the establishment of the Science and Technology Innovation Board and pilot registration and production are the top priority for deepening reform of the capital market.
In the view of some market participants, A-shares have continued to adjust recently, and there may be expectations for the Federal Reserve's interest rate hike. In addition, the central bank has announced that it will set a medium-term lending facility (TMLF), releasing long-term liquidity and supporting A-shares.
Yang Delong said that the US stock market has fallen sharply recently, with A-shares and Hong Kong stocks not following, but only slightly adjusting, and it is obvious that they have begun to emerge from the independent market. If it can be confirmed that the Fed will end the interest rate hike cycle next year, A-shares and Hong Kong stocks will perform beyond expectations. (End)
Recently, the People's Bank of China has frequently taken action to release liquidity to the market. A direct demand is that China has entered the "tight money" time zone at the end of the year, and it is necessary to invest a large amount of liquidity to hedge against the traditional tightening of liquidity.
Industry Bank Chief economist Lu Zhengwei said that policies such as the People's Bank of China's "targeted interest rate cuts" will reduce capital costs, help qualified banks increase liquidity and increase banks to support lending by small and micro enterprises.
Ming Ming, deputy director of CITIC Securities Research Institute, analyzed that the People's Bank of China has sent out a signal of reasonable liquidity at this time, indicating that the orientation of monetary policy easing remains unchanged and the domestic economy is still the priority. Considering the pressure faced by the economy, a rate cut can still be expected next year.
After the "targeted interest rate cut", will China's space for lowering the reserve requirement ratio in the future?
There are differences in the predictions of this analysis institutions, but analysts hold a similar view: as the Spring Festival approaches, the central bank will continue to increase open market operations, including the multi-term reverse repurchase combination to inject liquidity.
is different from China. Although concerns that the U.S. economy may peak has led to a continued sharp drop in U.S. stocks, Fed officials believe that the U.S. economic growth rate has exceeded its sustainable rate and have been raising interest rates to reduce the role of monetary policy in the economy.
Now, it is worrying that the fiscal support recession brought by Trump’s executive spending and the $1.5 trillion tax cut bill, and the global economic slowdown, may put the U.S. economy into a period of volatility.
ICBC International believes that the US economic cycle will reach a turning point in 2019. By mid-2019, the target range of the Federal Reserve's policy interest rate will likely reach a long-term neutral level (3%), and the room for interest rate hikes will narrow.
The Federal Reserve has hinted that the currency tightening cycle is coming to an end in the face of financial market volatility and a global economic slowdown, and interest rate hikes are expected to drop to two next year.
US media commented that the Fed's interest rate hike process is still more radical than market expectations. Before the policy meeting begins, U.S. interest rate futures traders believe that the Fed will raise interest rates no more than once next year.
RMB data picture China News Network reporter Jin Shuo
affects
For many people, whether it is the Fed's interest rate hike or the People's Bank of China's interest rate cut, the first time they are directly affected by investors in the financial market.
htmlOn 19, before the Federal Reserve announced the interest rate hike, the three major U.S. stock indexes rose by more than 1%. After the interest rate hike resolution was announced, the three major U.S. stock indexes turned around and fell sharply. The Dow Jones Index once fell "cliff-like" during the session! The yield on the 10-year U.S. Treasury bonds fluctuated and fell, and gold also showed a plunge.As of the close of the 19th, the Dow Jones Industrial Average fell 1.49% to 23,323.66 points, a new closing low since November 2017. The S&P 500 fell 1.54% to 2506.96 points. The Nasdaq Composite Index fell 2.17% to 6636.83 points.
htmlOn the 20th, affected by the US interest rate hike and the decline in US stocks, major stock indexes in the Asia-Pacific stock market opened and fell. As of press time, the Nikkei 225 index's afternoon decline expanded to 3%, while the TSE index fell nearly 2.5%.The mid-price of RMB exchange rate against the US dollar was 6.8936 yuan on the 20th, a 67 basis points lowered. Onshore and offshore RMB fell below the 6.91 mark against the US dollar, and the offshore RMB fell by nearly 100 basis points from its intraday high. In terms of
A shares, the Shanghai Composite Index opened at 2544.51 points, down 0.20%; the Shenzhen Component Index opened at 7402.20 points, down 0.22%. ChiNext Index opened at 1266.76 points, down 0.16%. Subsequently, the trends of the Shanghai and Shenzhen stock markets diverged. By the closing of the afternoon, the Shanghai Composite Index fell 0.82%, the Shenzhen Component Index fell 0.27%, and the ChiNext Index rebounded and turned red, rising 0.13%.
On the news front, the CSRC stated that the establishment of the Science and Technology Innovation Board and pilot registration and production are the top priority for deepening reform of the capital market.
In the view of some market participants, A-shares have continued to adjust recently, and there may be expectations for the Federal Reserve's interest rate hike. In addition, the central bank has announced that it will set a medium-term lending facility (TMLF), releasing long-term liquidity and supporting A-shares.
Yang Delong said that the US stock market has fallen sharply recently, with A-shares and Hong Kong stocks not following, but only slightly adjusting, and it is obvious that they have begun to emerge from the independent market. If it can be confirmed that the Fed will end the interest rate hike cycle next year, A-shares and Hong Kong stocks will perform beyond expectations. (End)
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