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It is expensive to help small and micro private enterprises to raise funds, which is the fundamental prescription to cope with the downward pressure of China's economy. To this end, the Central Bank of China implemented the reform of loan market quotation rate (LPR) mechanism on Tuesday, hoping to reduce the financing cost of the real economy through the guidance of full coverage of LPR. But that does not mean that China has no room to cut interest rates.
Liu Guoqiang, deputy governor of the Central Bank, told Reuters after a briefing on Tuesday that short-term reform is the main task. After the reform, there is room for interest rate reduction. Economic growth and CPI are the main factors to decide whether to reduce interest rates or not. Considering the changes in these two situations, Liu Guoqiang, deputy governor of the Central Bank, said. At the same time, the LPR mechanism reform will not lead to a decline in mortgage interest rates.
"Interest rate market reform is to build canals. From the background of this reform to improve the formation mechanism of LPR, the time for reform is ripe. It can be said that the time for reform is ripe." Liu Guoqiang said.
He pointed out that the introduction of a new LPR formation mechanism and independent pricing by banks with reference to LPR will help to dredge the transmission mechanism of monetary policy, reduce the financing cost of enterprises, and narrow the gap between national regulatory policies and real economic feelings.
Sun Guofeng, Secretary for Commodity Affairs of the Central Bank, also said that the reform of quoted interest rates in the loan market should focus on reforming and improving the formation and transmission mechanism of interest rates and improving the efficiency of interest rate transmission. As for the reserve ratio, the central bank announced the implementation of the new "three-tier and two-excellent" reserve ratio framework on May 6, which was implemented three times on May 15, June 17 and July 15. Now it is in place and has initially established a low deposit reserve ratio framework for small and medium-sized banks.
At present, the average reserve ratio of China is about 11%. This level is relatively low and medium among developing countries. If we add excess reserve to calculate a total reserve ratio, the total reserve ratio of China is also low compared with that of developed countries.
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