Chinese Min Bank's newly released Standing Lending Facility (SLF), commonly known as "sour and spicy powder") interest rate table shows that since January 17, the SLF interest rate is 2.95% overnight, 3.10% for 7-day varieties and 3.45% for 1-month varieties. Previously, overnight, 7-day, and 1-month SLF interest rates were 3.05%, 3.2%, and 3.55%, respectively.
Market participants said that the SLF interest rate reduction is a part of the adjustment of the policy interest rate system of the People's Bank of China, which will help guide the market interest rate center to move down moderately, and at the same time, it will also help to further reduce the financing cost of the real economy.
Source: Chinese Bank
SLF has three main characteristics
What do we often call "chutney"?
At the beginning of 2013, the People's Bank of China created a standing lending facility. According to the People's Bank of China, the main features of standing lending facilities are three points:
The first is initiated by financial institutions, which can apply for standing lending facilities according to their own liquidity needs
Second, the standing lending facility is a "one-to-one" transaction between the central bank and financial institutions, which is highly targeted
Third, the counterparty coverage of standing lending facilities is wide, usually covering depository financial institutions
Standing lending facility is the normal liquidity supply channel of Chinese Minmin Bank, and its main function is to meet the short-term liquidity needs of financial institutions. The targets are mainly policy banks and national commercial banks. The level of interest rates is comprehensively determined according to the regulation and control of monetary policy and the need to guide market interest rates. Standing lending facilities are issued by way of collateral, and qualified collateral includes high credit rating bond assets and high-quality credit assets.
Maintain the linkage of policy interest rates
A number of industry insiders said that the standing lending facility belongs to a kind of policy interest rate, and the SLF interest rate should be reduced after the winning interest rate of the 17th medium-term lending facility (MLF) operation and the open market reverse repurchase operation both fell by 10 basis points.
"The reduction of the standing lending facility interest rate is the linkage of the policy interest rate of the People's Bank of China." Wen Bin, chief researcher of Minsheng Bank, said that since the policy interest rate central reverse repo rate has been lowered, the SFL interest rate, which is the upper limit of the interest rate corridor, will also fall, maintaining the linkage of the policy interest rate.
Zhou Maohua, a macro researcher in the financial market department of Everbright Bank, believes that the current domestic economy is facing new downward pressure, in order to boost the financing demand of the real economy, the People's Bank of China's reduction of SLF interest rates is equivalent to lowering the upper limit of the interest rate corridor and narrowing the interest rate range, which helps to guide the market interest rate center to move down moderately, and also helps to reduce the fluctuation of market interest rates.
Some market participants also said that the narrowing of the interest rate corridor will also help further stabilize the market's expectation of reasonable and abundant liquidity, and help dredge the transmission of monetary policy.
Wen Bin stressed that after the reduction of interest rates such as MLF, reverse repurchase and SLF, the interest rate center from the policy interest rate to the money market, to the bond market, and finally to the credit market will also fall. "This has a positive effect on reducing the cost of funds in the current banking system, and thus encouraging financial institutions to further reduce the financing costs of the real economy." It is also conducive to giving play to the counter-cyclical regulation and control role of monetary policy and supporting stable growth and the development of the real economy. ”
Editor: Cao Shuai
