Cut interest rates twice in March! The interest rate of the Multilateral Fund has dropped to 2.5%, and the five-year LPR has more room for downward adjustment. Only two months after the policy cut interest rate in June, the market once again ushered in the reduction of MLF operating interest rate. So why did the central bank cut interest rates twice in three months? What signal was released?

The central bank lowered the policy interest rate twice in three months.

On August 15, the People's Bank of China announced that in order to hedge against the influence of tax peak period and other factors and maintain a reasonable and sufficient liquidity in the banking system, on August 15, the People's Bank of China launched an open market reverse repurchase operation of RMB204 billion and an intermediate loan facility (MLF) operation of RMB40 1 0 billion, which fully met the needs of financial institutions./kloc-0.

What does it mean for the central bank to cut interest rates and RRR?

RRR reduction refers to lowering the deposit reserve ratio. The interest rate cut is to increase the liquidity of the financial system, reduce the financing cost of the real economy, and achieve a stable economic operation. For ordinary lenders, cutting interest rates can save less money; For investment and wealth management people, interest rate cuts mean a decline in deposit income. RRR cut is one of the central bank's monetary policies.

RRR's interest rate cut only released the margin of commercial banks in the central bank, increased the supply of market funds, and was conducive to stimulating production links. The increase of currency circulation will cause inflation. The interest rate cut is to reduce the bank's loan interest rate. It does not increase the amount of market funds, but it can change the investment direction of funds, mainly to encourage the investment behavior of enterprises, which does not necessarily mean that the currency circulation will increase.

It has two main functions: first, by reducing the rate of return of central bank deposits, money will enter the market outside banks, and deposits will become investment or consumption, thus improving the activity of transactions and the liquidity of funds; Second, it can reduce the cost of loans, thus improving the competitiveness of products.

The operation mode of the central bank's interest rate reduction: the central bank's interest rate reduction refers to the financial mode in which the central bank reduces the deposit and loan interest rates and uses interest rate adjustment to change the cash flow. When banks cut interest rates, depositors' deposit income will decrease, which will lead depositors to withdraw their deposits and turn them into other investments or consumption, thus releasing liquidity to the market and stimulating the growth of the real economy.

Why should the central bank reduce RRR and cut interest rates?

First, support the real economy.

From the overall trend, with the slowdown of economic growth, low interest rates are an inevitable trend. Because the interest rate level is closely related to the speed of economic development, in the case of global economic slowdown, various investment returns have also decreased, pushing the interest rate level down.

As a country's economic development is getting bigger and bigger, the growth rate will be lower and lower. Just like driving a car, it will accelerate quickly at first, and then it will slow down because the speed is high enough. The same is true of economic development. The GDP is getting bigger and bigger, so the growth rate of GDP will be lower and lower.

We used to have a double-digit growth rate, but later it became 8%. This year's target is 5%, which really proves that GDP growth will be slower and slower.

Then it will bring a problem. Money is getting harder and harder to earn, and rich people and rich enterprises are increasingly reluctant to borrow money for production. Just like now, many people save money instead of borrowing money, and even have to repay the loan in advance.

Interest rate is the cost for banks to lend money to ordinary people. After the deposit interest rate is lowered, banks can get money at lower cost, which can better support the development of small and medium-sized enterprises and restore the real economy.

Second, stimulate household consumption.

As a big savings country, everyone likes to save money. Especially during the epidemic, China's savings amount exceeded 43 trillion yuan for three consecutive months, making it the largest country in the world. This is not a big problem for individuals. The problem is that everyone is holding their wallets and their willingness to consume is reduced. As one of the three driving forces to promote economic growth, economic development will not be optimistic without sufficient consumption as support.

Will interest rate cuts affect bank financing?

Yes, interest rate cuts will reduce the interest on bank deposits and loans, while wealth management products will invest in time deposits, so the income of wealth management products will also decrease, and interest rate cuts will not affect the wealth management products that have been issued.

It should be noted that there are many investment targets of wealth management products, such as time deposits, bonds, commodities, stocks, foreign exchange, options and futures. Therefore, even if interest rate cuts lead to a decline in time deposit income, the impact on wealth management products is limited.

Will bank financing fall below the net value?

Bank wealth management will fall below the net value, that is, the cumulative unit net value of bank wealth management products will fall below 1. The main reason for this situation is that the net value of products will decline due to the decline in the value of basic assets, while the basic assets of bank wealth management products are mainly allocated to bonds and mainly invested in high-grade credit bonds. When the bond yield rises rapidly, the net value will fall.

If the bank's wealth management products fall below the net value not because of their own reasons, but because of the market situation, that is, the market situation is not good, and other wealth management products in the market have a callback trend, and the callback range of this wealth management product is lower than that of other similar wealth management products, indicating that this wealth management product is OK, then investors can consider continuing to hold it, or covering their positions when they lose money, so as to reduce their position costs and spread risks. On the contrary, the callback rate of this wealth management product is much higher than that of similar wealth management products, which shows that it is OK.