How Asymmetric Interest Rate Cuts Stabilize the Economy(AI Translation)
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- After the 2024 Lunar New Year, China saw an unusual activity in data release and macroeconomic policy, with January's PMI rebounding, financial data starting strong, and policies aimed at sustaining economic recovery being implemented.
- The People's Bank of China (PBoC) maintained the Medium-term Lending Facility (MLF) rates but reduced the 5-year Loan Prime Rate (LPR) by 25 basis points to 3.95%, marking a significant and unexpected move to lower long-term borrowing costs.
- Despite these monetary policy adjustments, there remains uncertainty about their impact on economic stimulation. The asymmetric interest rate cut aims to support the real economy without adjusting MLF rates due to concerns over currency exchange rates and external monetary conditions.
文｜财新周刊 于海荣 王石玉 夏怡宁
By Caixin Weekly's Yu Hairong, Wang Shiyu, Xia Yining
往年春节前后原本是数据和宏观政策的相对“真空期”。2024年龙年春节过后的情形则略有不同，令市场为之一振。
In the past, the period around the Spring Festival was typically a relative "vacuum" for data and macroeconomic policies. However, the situation has changed slightly after the Dragon Year's Spring Festival in 2024, giving the market a notable boost.
“数据真空”是因为春节因素，除了信贷、社融等金融数据和价格数据等少量指标在2月照常发布，不少1月、2月宏观经济数据将合并到3月发布；通常，宏观政策细节多在3月初的全国“两会”上披露。2024年则有所不同，不仅1月统计局PMI止跌回升、金融数据开门红，而且稳增长政策接踵而来，确保经济持续复苏的用意十分真切。
The "data vacuum" is attributed to the Spring Festival effect. Aside from a few indicators such as credit, social financing, and price data that are released in February as usual, many macroeconomic data for January and February are consolidated and published in March. Typically, details of macroeconomic policies are disclosed at the beginning of March during the national "Two Sessions." However, 2024 presents a deviation from this norm. Not only did the January PMI from the National Bureau of Statistics rebound and financial data kick off on a high note, but a series of policies aimed at stabilizing growth have been successively introduced, demonstrating a genuine intent to ensure the continuous recovery of the economy.
货币政策一马当先。春节假期后的第一个工作日，作为政策利率的中期借贷便利（MLF）利率“按兵不动”。两天后的2月20日，央行授权全国银行间同业拆借中心公布的1年期贷款市场报价利率（LPR）维持不变，仍为3.45%，但5年期以上LPR一举下调了25个基点（BP）至3.95%。财新2月初的调查中，对5年期以上LPR作出预测的八家机构中，只有两家预计将下调至4.05%，其余均认为维持不变。
Monetary policy takes the lead. On the first working day after the Spring Festival holiday, the Medium-term Lending Facility (MLF) rate, which serves as a policy interest rate, remained unchanged. Two days later, on February 20th, the 1-year Loan Prime Rate (LPR) announced by the National Interbank Funding Center under the authorization of the central bank stayed constant at 3.45%. However, the LPR for loans of five years or longer was significantly reduced by 25 basis points (BP) to 3.95%. In a survey conducted by Caixin at the beginning of February, among eight institutions that made predictions about the LPR for terms of five years or more, only two anticipated a reduction to 4.05%, while the rest expected it to remain unchanged.
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