"Easy and moderate" - the monetary policy statement has deep meaning

Since the beginning of this year, the central bank has continued to implement a prudent and neutral monetary policy, strengthened pre-adjustment and fine-tuning and expected management, and created a suitable monetary and financial environment for the continuous development of China's high-quality economic development and supply-side structural reform. It is worth emphasizing that the “big water flooding” type of liquidity, whether from the financial market or the real economy, is not a sufficient and necessary condition for long-term healthy development, and it is still necessary to implement a stable and neutral monetary policy in the future.

Some experts stressed that "currency matching economy" is the core logic of a stable neutral monetary policy. The significance of a stable and neutral currency is to maintain a reasonable abundance of liquidity, but also to take into account the requirements of financial risk prevention and stable leverage. At the same time, the new relationship between monetary policy and the real economy, fiscal policy, exchange rate policy, and financial supervision also determines the pre-adjustment and fine-tuning of monetary policy orientation.

The National General Meeting held recently pointed out that a sound monetary policy should be moderately appropriate. Maintain a moderate amount of social financing and ample liquidity, unblock the transmission mechanism of monetary and credit policies, and implement the various measures that have been introduced.

The introduction of regulatory policies such as the new regulations on asset management, the overstatement of the monetary policy and the previous medium-term loan facilitation (MLF) volume operation further confirmed the marginal relaxation of monetary policy and, to a certain extent, the monetary policy orientation. Pre-tuned and fine-tuned.

Looking into the future, according to China's economic situation in the second half of the year, it is expected that monetary policy will still be marginally relaxed. From the perspective of RRR cuts, in order to maintain a reasonable and sufficient flow, there is still the possibility of a RRR cut in the third quarter. Some experts predict that it will be 0.5-1 percentage points, and the time point may be selected in October for seasonal tax payment. At the same time, MLF and Open Market Operations (OMO) will continue.

It is worth noting that the marginal easing of monetary policy does not mean that the policy has turned to this fundamentally. It does not mean comprehensive easing, but rather moderately loosened in the case of anti-risk and stable leverage.

First, the recent central bank operations have structural targets. For example, on April 25 this year, the central bank's operation on the RRR reduction of some financial institutions and the replacement of MLF was to increase support for small and micro enterprises and further increase the stability of funds in the banking system. The directional RRR cut on June 24 was to support the market-oriented legalization of debt-to-equity swaps and small and micro-enterprise financing. It can be seen that the recent central bank operations are not “big floods”, but are targeted, allowing funds to flow better into the realm of the real economy. The focus of subsequent monetary policy will be to guide funds to support the real economy and assist in “stable leverage” rather than simple aggregate expansion.

Secondly, strict financial supervision has become normalized, and it is still prohibited to flow funds into real estate and other fields. In the future, it will continue to strengthen supervision over the flow of funds. For example, strengthen financial regulation of real estate, overcapacity or “zombie companies”. Through multi-level supervision, we will grasp the specific flow of funds, and at the same time do more tracking, so that limited credit resources can be more effectively allocated, promote the ability of financial institutions to improve the service of the real economy, and resolutely control the credit resources in these areas. A moderate foundation for monetary policy implementation.

In addition, while monetary policy is growing steadily, it will work with macroprudential management to prevent risks, and it also determines that monetary policy will remain stable and neutral.