What signals did the first quarter monetary policy implementation report release and what hot spots did it reply?

Xinhua Finance and Economics, Beijing, May 11 (Reporter Zhai Zhuo) The "Report on the Implementation of China's Monetary Policy in the First Quarter of 2024" was released on the 10th, (hereinafter referred to as the "Report"), on the basis of reviewing the policy effectiveness since the beginning of this year and comprehensively analyzing the current economic and financial situation, it also explained the policy orientation and focus of the next stage, and released a positive signal.

Overall, in the next stage, the People's Bank of China will maintain the soundness of monetary policy, enhance the consistency of macro policy orientation, strengthen counter-cyclical and cross-cyclical adjustment, increase support for the real economy, and effectively consolidate and enhance the upward trend of economic recovery.

In response to the general concern of the market, the report also set up a number of columns to discuss hot topics such as "the relationship between credit growth and high-quality economic development", "where the money goes, where the money is" and "how to view the current long-term treasury bond yield".

The effect of monetary policy continues to be demonstrated

According to the report, since the beginning of the year, monetary policy regulation and control have been strengthened to support the economic recovery, including: reducing the reserve requirement ratio by 0.5 percentage points and releasing medium and long-term liquidity of more than 1 trillion yuan; Mortgage supplementary loans will be issued to support the construction of the "three major projects".

The above-mentioned policies have achieved remarkable results, effectively supporting the development of the real economy and promoting a virtuous cycle of economy and finance. As of the end of March, the scale of social financing and the growth rate of M2 were 8.7% and 8.3% respectively, and the scale of social financing and money supply matched the expected targets of economic growth and price levels. The reporter also learned from the bank that the central bank has guided the balanced delivery of credit in the early stage, and the loan growth rate in April is relatively stable, and the financial support will remain stable.

"Last year's 1 trillion additional treasury bonds have been issued, and this year will issue 1 trillion yuan of ultra-long-term special treasury bonds. Since April, enterprises are expected to accelerate the improvement, export growth has accelerated, and import volume and price have risen. "Some market experts expect that the effect of the policy combination is expected to continue to appear in the future, consolidating the momentum of economic price recovery.

In addition, the report also mentioned that the People's Bank of China will maintain price stability and promote a moderate recovery in prices as an important consideration in grasping monetary policy, and with the improvement of domestic demand, the price level will show a moderate upward trend. The consensus expectation is that the April CPI is expected to rebound from its lows.

"Judging from the current situation, the economic growth rate in the second quarter may still remain at a relatively high level of about 5.5%, and the sustained economic improvement is expected to continue, and it is not difficult to complete the annual growth target." The above-mentioned market experts expect that in the next stage, the central bank will observe more of the effect of the previous policy and the economic recovery, strengthen policy coordination, and grasp the intensity and rhythm of regulation and control according to the changes in the situation, so as to promote the sustained recovery of the economy.

The intensity of financial support entities has not been reduced, and the quality and efficiency have been improved

In terms of hot topics, the report focuses on the relationship between credit growth and high-quality development in column 1, emphasizing that the total amount of credit in the mainland has slowed down from a high growth rate of more than double digits in the past to single digits, but this does not mean that financial support for the real economy has weakened.

Some interviewed experts said that the scale of the mainland's credit stock is already relatively high, and with the acceleration of economic restructuring and transformation and upgrading, the quality and efficiency of financial support for the real economy also need to be further improved. At present, the central bank pays more attention to guiding the balanced distribution of credit, and the financial support for the real economy is stable.

Combined with the financial data in the first quarter, the total financial volume grew steadily, and the credit rhythm was more stable. The reporter learned that according to the law of history, April, July and October are usually small months for loans, but from the situation reflected by the bank, the credit delivery in April this year is still stable, and the small month is not small is the characteristic of this year.

And in the process of high-quality economic transformation, we should not only look at the quantity, but more importantly, the quality. Since the beginning of this year, relevant responsible persons of the People's Bank of China have repeatedly stressed the need to revitalize the stock of financial resources, optimize the credit structure, and improve the efficiency of the use of funds.

As of the end of March, the year-on-year growth rates of financial institutions' loans to high-tech manufacturing, inclusive small and micro loans, agriculture-related loans and private economy loans were 27.3%, 20.3%, 13.5% and 10.7% respectively, all of which were significantly higher than the growth rate of all loans of 9.6%.

At the same time, with the major changes in the relationship between supply and demand in the real estate market, the strengthening of local debt risk prevention and control, and the decline in the market competitiveness of some inefficient enterprises with a high degree of correlation with traditional development models, the growth rate of loans in related fields has slowed down.

"On the whole, financial support for the real economy has increased and decreased, and the revitalized resources have been invested more in the areas that should be supported, which is conducive to accelerating economic transformation and upgrading and high-quality development." So said the above-mentioned interviewed experts.

Accurately understand "where the money goes, where the money is"

In the report, column 2 specifically analyzes the flow of bank deposits and loans, and uses detailed data to answer the questions of "where does the money go, where does the money go" and the market's questions about "why the trend of financial and economic data is inconsistent". According to the report, loans are mainly invested in enterprises and the supply side of the real economy, while deposits are mainly in the residential sector.

Specifically, the central bank can appropriately guide "where the money goes", but it mainly depends on the needs of economic entities themselves. According to the report, in the past, mainland loans were mainly invested in enterprises, and in terms of industry and term structure, they were mainly in heavy asset sectors such as infrastructure, real estate, and manufacturing, and most of them were medium and long-term loans.

"In recent years, the central bank has been actively guiding capital investment, and with the acceleration of economic transformation and upgrading, the credit structure is also being optimized. However, due to the lack of effective consumer demand, the supply side of the real economy and the investment sector have received more financing, which also explains to a certain extent why inflation in the mainland remains low in the context of high global inflation. Some industry insiders said.

In addition, it will take time for the economic cycle to recover, and at the moment part of the money is deposited in the residential sector. At the same time, due to the impact of the epidemic and the decline in risk appetite, enterprises and residents are more inclined to deposits with more stable returns, especially time deposits, at the mercy of assets, resulting in less "live money" in the economic cycle and poor circulation, which also explains why people and enterprises are short of money in micro feelings, while the total amount of money in the financial system is still increasing.

"At present, there is already a lot of money stock, and the key is to revitalize the stock and smooth the circulation." The above-mentioned industry insiders said that the focus of macroeconomic policy in the future should be shifted from increasing supply in the past to increasing consumer demand and promoting the balance between supply and demand.

Supply and demand in the bond market are expected to return to equilibrium

Since 2024, the yield of medium and long-term bonds in the mainland has fallen significantly, the yield of 30-year government bonds has run below 2.5%, and the yield of 10-year government bonds has hit the lowest in 20 years.

An interviewee told reporters that the central bank has been paying close attention to the trend of the bond market and has frequently released signals recently. A few days ago, the central bank also conducted a special investigation on the participation of rural commercial banks in the bond market, and intended to guide policy banks to increase the issuance of long-term bonds. The report once again responds to how to view long-term Treasury bond yields through a column, aiming to guide long-term Treasury yields back to a reasonable range.

Judging from the recent trend of yields, after the central bank has repeatedly spoken out on long-term treasury bond yields, the market investment strategy has also been adjusted, and investors are more concerned about the interest rate risk of long-term bond investment, and the investment behavior tends to be stable and rational. Long-term bond yields have recently started to recover, and the 30-year Treasury note has regained its footing at 2.5%.

In addition, the current market institutional investment behavior is also more prudent. There has been a certain amount of repetition in the recent correction of long-term treasury bond interest rates, and some investors may still have a short-term game mentality. However, more investors are aware of the greater risk of investment behavior being too short-term, especially after the central bank will incorporate the trading of treasury bonds into the regular operation tools of the open market in the future, it can regulate market supply and demand through the purchase and sale of treasury bonds, which will also promote the smooth operation of yields.

"In the long run, the fundamentals of the mainland's economy have not changed, and the yield of long-term treasury bonds will generally run within a reasonable range that matches long-term economic growth expectations, and the supply and demand of the bond market are expected to further balance in the future." So said the interviewee.

Combined with the normal operation of the market in recent years, 2.5%-3% may be a reasonable range for long-term treasury bond yields, according to the interviewee's observation, after the long-term treasury bond yields returned to more than 2.5%, the central bank also made a moderate statement.

Editor: Xing Lisha

Statement: Xinhua Finance is a national financial information platform undertaken by Xinhua News Agency. In any case, the information published on this platform does not constitute investment advice. If you have any questions, please contact customer service: 400-6123115