＂RRR cut+targeted interest rate cut＂ has accumulated positive effects on inclusive finance’s efforts to boost market participants’ confidence.

　　CCTV News:The People’s Bank of China announced on January 24th that it has decided to reduce the deposit reserve ratio of financial institutions by 0.5 percentage points from February 5th, 2024. Since January 25, 2024, the interest rates of agricultural refinancing, small-scale refinancing and rediscount have been lowered by 0.25 percentage points respectively.

　　Central Bank: The deposit reserve ratio will be lowered by 0.5 percentage points from February 5th.

　　People in the industry generally believe that this RRR cut and the refinancing rate cut are at a critical moment to consolidate the economy and stabilize expectations, releasing the signal that monetary policy will increase its strength and steady growth, which will obviously boost market sentiment.

　　The RRR cut will provide the market with long-term liquidity of about 1 trillion yuan.

　　Pan Gongsheng, governor of the People’s Bank of China, said that at present, the average level of the statutory deposit reserve ratio in China is 7.4%, which is still relatively large compared with the central banks of major international economies. After this reduction, the weighted average deposit reserve ratio of financial institutions is about 7.0%, which will provide the market with long-term liquidity of about 1 trillion yuan.

　　"Exceeding expectations" to reduce the RRR and enhance the stability of money and credit supply

　　Analysts pointed out that the RRR cut exceeded market expectations in both timing and scope, which helped to optimize liquidity in the banking system’s structure, stimulate market vitality and enhance the stability of money and credit supply, reflecting that the central bank’s goal of supporting the recovery of the real economy is very clear.

　　Judging from the data over the years, in January, in order to increase the level of RMB loans to a higher level, the RRR cut was conducted on the eve of the Spring Festival, which was conducive to avoiding the shortage of funds, achieving a "good start" for the economy at the beginning of the year and creating a more favorable monetary environment.

　　The "RRR cut+targeted interest rate cut" model reflects the precise and effective tone.

　　It is noteworthy that the central bank announced the RRR cut and the interest rate cut by refinancing at the same time. The mode of "RRR cut+targeted interest rate cut" shows the impact of the current central bank’s monetary policy on inclusive finance and the pursuit of accurate and effective tone.

　　Boost the confidence of market participants and improve the expectation of capital market.

　　Recently, the volatility of the capital market has weakened and the volatility has increased, which has made many investors deeply worried. Analysts believe that this RRR cut will help boost the confidence of market players and improve the expectations of investors in the capital market. After the central bank of China announced the RRR cut, the assets of Hong Kong stocks and overseas China rose, and the RMB exchange rate also rose linearly. MSCI China A50 Interconnection Index Futures and FTSE China A50 Index Futures both rose more than 2%.

　　The policy is favorable and the accumulated market outlook is expected to stabilize.

　　On the same day, the State-owned Assets Supervision and Administration Commission of the State Council said that it would further study the incorporation of market value management into the performance appraisal of the heads of central enterprises. With the accumulation of favorable policies, the market may enter a rebound stage, and the market outlook is expected to stabilize and reverse.

　　This RRR cut will help improve the expectation of real estate recovery.

　　For the real estate market, this RRR cut will help improve the expectation of real estate recovery. On the one hand, the RRR cut will help improve the real estate credit environment. On the other hand, the central bank stepped up its efforts to stabilize the growth policy and improve the expectation of economic recovery. The effect of the policy of stabilizing the property market introduced before the superposition was gradually released, which was conducive to the restoration of real estate confidence.

　　Central Bank: Creating a Good Monetary and Financial Environment for Economic Growth

　　Pan Gongsheng said that in 2024, the spillover of monetary policy in developed economies will develop in the direction of reducing pressure. Such a change in external environment is objectively conducive to enhancing the autonomy of China’s monetary policy operation and expanding the space for monetary policy operation.