On November 18, 2019, the people's Bank of China launched a reverse repo operation of RMB 180 billion in the form of interest rate bidding, with a term of 7 days, and the bid winning rate of 2.50%, previously 2.55%.
Earlier, on November 5, while the central bank continued its medium-term lending facility (MLF), the MLF interest rate was cut to 3.25% from 3.3%. According to the report on the implementation of China's monetary policy in the third quarter of 2019, the decrease of MLF bid winning interest rate promotes the increase of market risk preference, boosts confidence, reflects the reduction of average marginal capital cost of financial institutions, helps to reduce the actual loan interest rate of enterprises, and promotes the reduction of social financing cost.
For the decline of reverse repo rate, Xie Yunliang, chief Macro Analyst of Minsheng securities, said that according to the experience in recent years, the central bank's policy interest rate is generally coordinated adjustment. The decrease of reverse repo interest rate is conducive to the reduction of bank debt cost and the downward trend of credit cost.
Wang Qing, chief Macro Analyst of Dongfang Jincheng, said that on the one hand, it will reduce the average marginal capital cost of financial institutions, promote the LPR quotation to be released on Wednesday to resume the downward trend, and then reduce the actual loan interest rate of enterprises. On the other hand, this is also in the context of the current macro-economic downward pressure, the regulators released a clear counter cyclical policy adjustment to strengthen the signal, which will help stabilize market confidence and the macro-economic operation in the fourth quarter.
