At the press conference held by the State Council Information Office on September 24, the central bank announced a number of major policies, including reserve requirement ratio cuts, interest rate reductions, and the lowering of existing housing loan interest rates. What impact will these policies have on the market? Wen Bin, Chief Economist of Minsheng Bank, and Lian Ping, Chairman of the China Chief Economists Forum, provide their interpretations.

Policy One: The reserve requirement ratio will be reduced by 0.5 percentage points in the near future.

Wen Bin, Chief Economist of Minsheng Bank, stated that the reduction of the reserve requirement ratio means releasing long-term, low-cost funds into the financial system, which helps guide financial institutions to further lower the financing costs for the real economy. Recently, there has been a peak in the issuance of government bonds and local government special bonds, and the reserve requirement ratio cut is also conducive to financial institutions increasing their allocation of government bonds, promoting better coordination between monetary policy and active fiscal policy, and consolidating the economic recovery trend. Wen Bin also indicated that in the fourth quarter, there will be more than 3.6 trillion yuan of medium-term lending facilities maturing, and the central bank may still continue to replace some of the maturing medium-term lending facilities through reserve requirement ratio cuts, thereby optimizing the capital structure of the banking system and reducing liability costs.

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Policy Two: The central bank's policy interest rates will be reduced, with the 7-day reverse repo operation interest rate being lowered by 0.2 percentage points, from the current 1.7% to 1.5%.

Wen Bin said that in June of this year, the central bank had clearly designated the 7-day reverse repo interest rate and other short-term operational interest rates as the main policy interest rates, transmitting to other longer-term interest rates through short-term interest rate adjustments. At the same time, policy interest rate adjustments will quickly be transmitted to the financial market, including adjustments in the money market, bond market, and deposit and loan interest rates. With the deepening advancement of interest rate marketization, the interest rate price lever will play a more important role in transmitting monetary policy intentions. Wen Bin assessed that there is still a lot of room for future monetary policy to further promote economic recovery and a moderate rise in prices.

Policy Three: Reduce the interest rates on existing housing loans and unify the minimum down payment ratio for housing loans.

Lian Ping, Chairman of the China Chief Economists Forum, stated that the overall market interest rates are generally trending downward, and the monetary policy is loose, while the interest rates on existing housing loans are relatively high, and there is a sentiment in the market to repay loans in advance. After the introduction of this policy, on the one hand, it helps to curb the sentiment of repaying loans in advance, reduce the housing loan costs for homebuyers, and enhance the consumption capacity of families; on the other hand, it can increase the willingness of homebuyers to invest in the real estate market and play an active role in helping the real estate market operate smoothly.

Policy Four: Establish swap facilities for securities, funds, and insurance companies, and special re-lending for stock buybacks and increases.

Lian Ping stated that the establishment of swap facilities for securities, funds, and insurance companies by the central bank is key to the word "convenience." Financial institutions such as securities, insurance, and funds holding financial assets such as government bonds and local bonds can more conveniently obtain funds, convert assets into liquidity injected into the market, and play an active role in promoting the capital market. The special re-lending for stock buybacks and increases is mainly aimed at listed companies. When the market is sluggish and stock values are significantly undervalued, it is conducive to listed companies conducting buybacks, which is of great importance for stabilizing stock prices and maintaining the stability of the capital market.