RRR cut generally means that the central bank has reduced the deposit reserve of other commercial banks, which will have a certain impact on the loan interest rate, because after RRR cut, major banks can flexibly use more funds, but some people say that RRR cut will benefit bonds, so why will RRR cut benefit bonds? What is the reason? We have prepared relevant contents for your reference.

Reducing RRR will be beneficial to bonds, because it will lead to an increase in the funds that banks can use for loans, an increase in the amount of money circulating in society, and more sufficient funds in the market. To a certain extent, it will increase the capital flow in the bond market, thus promoting the rise of bonds. As bond prices rise, the income of bond funds will naturally increase, which is beneficial to bond funds.

Generally speaking, the RRR cut by the central bank reflects the slowdown or decline of economic development in the early stage of the market to a certain extent. The central bank releases more funds by lowering the deposit reserve ratio and increases the liquidity of funds, thus stimulating economic growth.

However, it should be noted that the RRR cut by the central bank will also have a certain impact on the market interest rate, which may lead to a downward adjustment of the market interest rate and a decline in the market interest rate, so the bond price will rise.

Secondly, RRR reduction means loose monetary policy. At this time, the interest rate in the market may be lowered. For bond funds, the coupon rate of bonds may be lowered at this time, which may indirectly lead to the decline of bond fund income, but generally speaking, the impact will not be particularly great, because the bond coupon rate invested by bond funds before RRR reduction is fixed, and the income will not be reduced because of RRR reduction.

I hope the above content can help everyone ~