Reporter wang yu
The people's bank of china released the second quarter of 2022 monetary policy implementation report on wednesday, noting that high inflation is becoming the biggest challenge to global economic development and that structural inflationary pressures may increase in the short term, with “investment” in price stability。
Compared to the first quarter of the report on monetary policy implementation, the second quarter highlighted the importance central banks attach to “stable prices”. The central bank has stated that, in terms of fundamentals, the country is well placed to maintain overall stability in price levels and is on track to meet the target of an average annual increase in the consumer price index (cpi) of around 3 per cent. However, import-inflationary pressures persist, multiple factors may rebound in a phased manner, and the cpi increase of 3 per cent in the second half of the year may be phased in the same month。
In particular, the central bank noted that recent high levels of global inflation had continued, particularly in the major developed economies, which had faced high inflationary pressures that had not existed for decades, with the united states, cpi, eurozone adjustment and consumer price index (hicp) rising by 9. 1 per cent and 8. 6 per cent, respectively, in june, almost 40 years and statistically highs, respectively, and macroeconomic policies in a dilemma between steady growth and inflation resistance。
“this is closely related to prior periods of miscalculation of the inflation situation by the central banks of developed economies and the fact that policy adjustments have lagged behind the market curve, and has also inspired and inspired macroeconomic regulation in our country.” the central bank states in column 4 that “year-round prices can still achieve the desired goals, but be alert to structural inflationary pressures.”。
“maintenance of currency stability is the primary responsibility of central banks, and maintaining stability of inflation is part of the macro-level stabilization and an environmental requirement for sustained and stable economic growth. At all times, the central bank should maintain a high level of attention to marginal changes in price movements, take into account a combination of multiple factors, objectively assess future inflation, and make proactive policy arrangements. The central bank says。
Thus, with regard to the next stage of policy thinking, the central bank pointed to the need for cross-cyclical regulation, combining short- and long-term, economic growth and price stability, internal and external balance, and insisting not to “deep water” and not overspent currency to provide stronger and better quality support to the real economy。
According to analysts, the central bank’s emphasis on “stable prices” suggests that the second half of the year is less likely to see a reduction in policy rates and a general reduction in rates. The central bank will focus more on using structural policy instruments to be precise, keeping the economy functioning in the right place and striving to achieve the best results。
Wang qing, the chief macroanalyst of eastern kim zheng international credit assessment, stated to the interface news that the central bank had referred to “a balance between economic growth and stable prices, not excessive currency”, mainly in the light of the difficulty of achieving significant cooling in high inflation abroad in the second half of the year, and the fact that the central bank would be more focused on easing, price stability, using structural policy instruments to be effective, and avoiding excessive currency flooding, against a backdrop of structural inflationary pressures such as higher pork prices. This means that in the second half of the year, the likelihood of a reduction in policy interest rates and across-the-board rates has been reduced, and there is also a moderate upward trend in the apparently low market rates。
The chief analyst of fixed gains in shanghai also stated that central bank monetary policy in the second half of the year focused on internal and external balance, maintaining the exchange rate stability of the renminbi abroad, strengthening the implementation of sound monetary policy internally, performing the combined volume and structure of monetary policy instruments, reducing the use of such instruments as interest-rate reductions, and maintaining a reasonable level of liquidity through open-market operations, while insisting on “blowing.”。
Leungs, a researcher at the china bank institute, believed that monetary policy would continue to be robust in the second half of the year. While there is some upward pressure on the cpi, the current price level does not yet place a strain on monetary policy, nor does it affect monetary policy's diversion to the prosecution, and the reduction in interest rates depends largely on domestic economic performance in the second half of the year。
“there has been a rising trend in the cpi in the country in recent years, and there is a general interest in promoting economic recovery, and the continued strength of monetary policy will lead to higher prices, but the further increase in the cpi is mainly due to the impact of food prices, such as pork, vegetables, etc., especially the impact of the epidemic, which has led to population hoarding, supply chains, etc. ... (and) not due to an increase in domestic demand。
According to data released by the national statistical office on wednesday morning, in july, china's cpi increased by 2. 7 per cent, an increase of 0. 2 percentage points over the previous month and a rise since august 2020. According to information disclosed by the department of statistics, the rise in food prices, such as pork and fresh vegetables, and the effects of seasonal factors are the main factors driving the cpi up。
In comparison, for example, the price of pork declined from 6. 0 per cent last month to 20. 2 per cent; the price of fresh fruit and vegetables rose by 16. 9 per cent and 12. 9 per cent, respectively; and the price of food, poultry, eggs and vegetable oil increased by between 3. 4 and 7. 4 per cent. Overall, food prices increased by 6. 3 per cent over the same period, an increase of 3. 4 percentage points over the previous month, affecting an increase of about 1. 12 percentage points in the cpi。
The following are the main differences and differences between the second quarter of the report on monetary policy implementation and the first quarter of the report: points
Economic situation study: the central bank believes this time that global economic growth is slowing, inflation is high and the domestic economic recovery base needs to be solid, and refers to “the potential for increased structural inflationary pressures”。
Second quarter: the current slowdown in global economic growth, high inflation, continuing geopolitical conflicts, a more severe and complex external environment, the need for a solid base for domestic economic recovery and the possibility of increased structural inflationary pressures. In general, however, the fundamentals of our long-term economy have not changed, the economy has remained resilient, macro-policy instruments are abundant, the conditions for high-quality economic development are numerous, and it is important to remain strategic and to act firmly for itself。
Quarterly: in the recent past, the new coronary pneumonia epidemic and the crisis in ukraine have led to an increase in risk challenges and the complexity, severity and uncertainty of our economic development environment. At the same time, it should be noted that there are many strategic advantages to our development, with large economies, wide leeway, strong resilience and super-large markets, and the fundamentals of long-term good。
Objective (guidelines): from “support” to “support” to secure employment prices. The central bank did not mention “stable growth” this time, but it mentioned that “macro-policy regulation tools are rich “in terms of enabling conditions to promote high-quality economic development.” central banks can thus still help market players to stabilize their economies by serving both the volume and the structure of monetary policy instruments。
Second quarter: maintaining a steady and steady pace of progress, complete, accurate and comprehensive implementation of the new concept of development, accelerating the construction of a new development paradigm, deepening supply-side structural reforms, building a modern central banking system, improving the framework for modern monetary policy, securing policy measures, focusing on job stability, playing a key role in effective investment, and consolidating the economic upturn。
First quarter: maintain a steady, steady and progressive approach to development, complete, accurate and comprehensive implementation of the new concept of development, accelerating the construction of a new development paradigm, deepening supply-side structural reforms, supporting steady growth, employment and price stability, building a modern central banking system, strengthening a modern monetary policy framework, promoting high-quality development and stabilizing the macroeconomic landscape。
Policy tone: in the second quarter of the report on monetary policy implementation, central banks emphasized the need for cross-cyclical adjustments that balance short- and long-term, economic growth and price stability, internal and external balances and do not exceed currency. Here again, central banks refer to price stability, followed by “book 4”, which refers to “the need to be alert to structural inflationary pressures”. According to the central bank, the current dilemma between stable growth and anti-inflation macroeconomic policies in advanced economies in europe and the united states is closely linked to earlier miscalculation of inflation by central banks in developed economies, and the fact that policy adjustments lag behind the market curve, as well as providing inspiration and inspiration for macroeconomic regulation in our country. At all times, the central bank should maintain a high level of attention to marginal changes in price movements, take into account a combination of multiple factors, objectively assess future inflation, and make proactive policy arrangements。
Second quarter: strengthen the implementation of sound monetary policy, function both in terms of volume and structure of monetary policy instruments, respond proactively, boost confidence, manage cross-cyclical adjustments, take into account short-term and long-term, economic growth and price stability, internal and external balance, and insist on not “deep water” and no excess currency to provide stronger and better quality support to the real economy。
Quarterly: robust monetary policy strengthens support for the real economy, is sound, responds proactively, builds confidence, fixes inter-cyclical adjustments, insists on avoiding “deep water spills”, fulfils the combined volume and structure of monetary policy instruments, implements sound corporate employment policy measures, and focuses on supporting micro-enterprises and vulnerable sectors affected by the epidemic。
Credit and social cohesion: from “enhanced stability in the growth of total credit” to “sustained a reasonable increase in the size of monetary supply and social financing”, this shift is consistent with the emphasis above on “non-surplus currency” in the light of “term and long term” “economic growth and price stability”. “intension of credit support to the region, policy development of financial instruments and focused support for infrastructure development” can be seen as a central bank response to the spirit of the central political bureau meeting in late july。
Second quarter: maintaining a reasonable level of liquidity, increasing credit support for enterprises, developing financial instruments with a good policy focus on supporting infrastructure development, maintaining a reasonable increase in the supply of money and in the scale of social financing, and achieving the best results for the functioning of the economy。
Quarterly: maintaining reasonable liquidity with a variety of monetary policy instruments, increasing the stability of the growth of credit stock, keeping monetary supply and social finance on a par with nominal economic growth, and keeping macro-leveraging generally stable。
Interest rate: the wording is broadly consistent with the one-quarter period, with only the addition of “a guide to the rates of exchange quoted in the loan market”。
Second quarter: sound market-based interest rate formation and dissemination mechanisms, optimization of the central bank policy interest rate system, enhanced supervision of deposit interest rates, an important role in the market-based adjustment mechanism for deposit interest rates, efforts to stabilize the bank's liability costs, effectiveness and guidance of the reform of interest rates on loan market quotations, and promotion of lower costs of integrated financing for enterprises。
First quarter: sound market-based interest rate formation and transmission mechanisms, optimization of the central bank's policy interest rate system, enhanced supervision of deposit interest rates, an important role in the market-based adjustment mechanism for deposit rates, efforts to stabilize the bank's liability costs, sustained release of interest rate reform on loan market offers, and promotion of lower costs of integrated financing for enterprises。
Exchange rate: emphasis continues to be placed on “maintenance of the basic stability of the rmb exchange rate at a reasonable level of equilibrium”。
Second quarter: a system of managed floating exchange rates based on market demand and supply, with reference to a basket of currencies, a bottom-line thinking, a strengthening of macroprudential management of cross-border financial flows and the maintenance of basic stability of the renminbi exchange rate at a reasonable level of equilibrium。
First quarter: maintaining a system of managed floating exchange rates based on market demand and supply, with reference to a basket of currencies, strengthening macroprudential management of cross-border financial flows, strengthening the management of expectations, guiding market subjects towards the concept of “risk neutrality”, maintaining the normal functioning of the foreign exchange market and maintaining the basic stability of the renminbi exchange rate at a reasonable level of equilibrium。
Financial risk: as developed economies accelerated their interest rate hikes in the second quarter, the central bank's reference to external financial risk shifted from “ following closely monetary policy adjustments in major developed economies” to “ following closely the economic dynamics of major developed economies and the spillover effects of monetary policy adjustments”. Moreover, the central bank's reference to the “general stability of the financial system” seems to be a response to the recent bad end-of-the-house standstills and difficulties in collecting money from village banks。
Zheng ga wei stated that regulation would maximize financial market stability and avoid run-off risks, while also combating financial crime. With respect to the protection against risks in the real estate sector, regulation will lead to the marketing and active involvement of financial institutions in risk management and will support local governments in their active promotion of “safe houses, livelihood, stability”。
Second quarter: follow closely the economic dynamics of the major developed economies and the spillover effects of the monetary policy adjustments, with my main focus on internal and external balance. Following the principle of market-based rule of law, integrated economic development and risk prevention, maintaining the overall stability of the financial system and maintaining a firm baseline against systemic financial risk. Efforts are being made to stabilize the macro-economic situation and keep the economy functioning in a rational manner, with a view to achieving the best possible outcome and to taking concrete action in anticipation of the 20-year victory of the party。
Quarterly: follow closely the monetary policy adjustment in the major developed economies, with my main focus on internal and external balance. To maintain a bottom line of thinking, to strengthen a systemic perspective, to follow the principle of market-based rule of law, to integrate major financial risk prevention and mitigation efforts, and to stay firm in the line of absence. Efforts have been made to stabilize the macro-economic situation and keep the economy functioning in a rational manner in order to take practical action in anticipation of the 20-year victory of the party。
