Not long ago, china securities journal published an article on the front page entitled "There is still room for the monetary policy reserve to be lowered enough to cut interest rates". Some experts said that there is sufficient room for increasing the regulation of monetary policy. It is expected that relevant departments will flexibly use tools such as RRR reduction and interest rate reduction according to changes in the economic situation, and at the same time do a good job of "addition and subtraction" of structural monetary policy tools, and increase support for key areas and weak links in the real economy. There are indications that RRR and interest rates will be lowered in the next few months of this year, and it is very likely that RRR will be lowered first in the near future.

What is RRR cutting?

The reduction of RRR means that the central bank reduces the statutory deposit reserve ratio. The statutory deposit reserve ratio is the ratio of the reserves of commercial banks to the deposits absorbed by commercial banks as stipulated by law. All the deposits absorbed by commercial banks cannot be lent out, and a part must be kept as a reserve for depositors to withdraw at any time according to the legal proportion.

For example, the statutory deposit reserve ratio is 10%. According to the regulations, after the bank receives the deposit of 100 yuan, it needs to freeze 10 yuan, and the remaining 90 yuan can be used for loans. If the RRR is reduced, for example, from the statutory deposit reserve ratio 10% to 8%, then banks only need to reduce the frozen funds to 8 yuan, and 92 yuan can use them for loans.

Therefore, it is clear to us that reducing RRR means reducing the statutory deposit reserve ratio. At present, the weighted average deposit reserve ratio of bank financial institutions is about 7.6%, which means that for every 100 yuan deposit, the bank will freeze about 7.6 yuan to the designated account.

The statutory deposit reserve ratio is one of the three major policy tools for modern central banks to carry out macro-control. If the central bank reduces the statutory deposit reserve ratio, the reserve will be released, which will provide new excess reserves for commercial banks to repay loans or issue loans, thus expanding the scale of credit and stimulating economic prosperity.

What is the impact of RRR interest rate cuts on bond funds?

Bonds refer to the certificates that repay the principal and interest at maturity, and bond funds invest most of their funds in this certificate, so the main income of bond funds comes from the spread between bond coupon rate and transactional bonds.

1, RRR cut 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 a decline in the income of bond funds.

2. After 2.RRR cuts, these funds will seek more profitable stock markets. If all the funds flow to the stock market, it will be unfavorable to the bond market, so it will also lead to a decline in the income of bond funds.

Although the above two points will lead to a decline in the yield of bond funds, the impact is limited, because the bond coupon rate invested by bond funds is fixed before the RRR cut, and the yield will not be reduced because of the RRR cut.

3. After 3.RRR cuts, the coupon rate of bonds will decrease, which means that the price of bonds will increase, and fund managers may sell bonds at a premium. If the premium income exceeds the reduced coupon rate, the bond fund's income will increase after the RRR is reduced for a period of time.