On April 9th, the People's Bank of China (hereinafter referred to as the "central bank") announced that it had conducted a 500 million yuan 7-day reverse repurchase operation through fixed interest rate and quantity bidding, fully meeting the needs of primary traders. This is the sixth consecutive trading day since April 1st that the central bank has conducted "land volume" operations. Except for the operation amount of 1 billion yuan on April 3rd, the amounts on April 1st, April 2nd, April 7th, April 8th, and April 9th were all 500 million yuan. Industry insiders generally believe that this series of operations is mainly a flexible adjustment made in response to changes in market capital supply and demand, reflecting a supportive monetary policy stance and a refined regulatory approach. From the direct reasons behind the operation, the core of the expansion and contraction of land use lies in the significant decrease in the demand for central bank funds by financial institutions. Recently, the monthly average overnight collateralized repo rate (DR001) of deposit based financial institutions has continued to operate below 1.3%. On April 2nd, the yield to maturity of 1-year commercial bank (AAA rated) interbank certificates of deposit fell below 1.5%, hitting a historical low and both are at a relatively low level. The recent continuous' volume 'operations in the public market are mainly due to the loose market liquidity since early April. As a result, the central bank has moderately 'cut back' on liquidity regulation in the short and medium term, releasing signals to guide stable funding and avoid excessive downward deviation of major market interest rates from policy rates, which helps to stabilize market expectations. ”According to Wang Qing, Chief Macro Analyst of Oriental Jincheng. Industry experts point out that the statement of "fully meeting the needs of primary traders" indicates that the main reason for the decline in central bank investment is the decrease in reserve requirements. Previously, the net withdrawal scale of the two buyout style reverse repurchases was relatively low, indicating that the central bank has no intention of forcibly reversing the capital situation from "loose" to "tight" through rapid withdrawal of medium - and long-term liquidity. It is more inclined to regulate the liquidity environment through mild reduction of base money injection and spontaneous digestion of excess reserves by the market, reflecting a supportive monetary policy stance. Looking ahead, the funding situation is expected to remain loose. According to a research report by Huachuang Securities, based on historical experience, the funding situation usually remained loose from April to May. In the current situation where credit demand continues to be weak and the net financing scale of government bonds is difficult to exceed expectations, the reserve requirement of the banking system is expected to remain low, which may provide a foundation for the continued loose operation of the funding situation. Wang Qing also believes that the recent actions of the central bank do not represent a change in the tone of moderately loose monetary policy. It is expected that after the main market interest rates rise to near the policy rate, the scale of open market operations will increase, and buyout reverse repurchase is also expected to resume net investment. The impact of external factors on monetary policy has also become a focus of market attention. Lin Yaheng, a macro strategy analyst at Southern Fund, stated that the core of future monetary policy will be "self centeredness, selective decision-making, and a combination of quantity and structure". Reserve tools such as reserve requirement ratio cuts and interest rate cuts are expected to be retained in total, and external shocks may be hedged if necessary; Continue to promote the stable and moderate reduction of social comprehensive financing costs in terms of prices; Structurally, further increase targeted support for technological innovation, expanding domestic demand, private small and micro enterprises, and key areas. The subsequent monetary policy will emphasize more precision, foresight, and coordination with fiscal policy while maintaining a loose orientation, "said Lin Yaheng. Wang Qing believes that in the short term, during the sudden increase in external uncertainty, domestic monetary policy may temporarily tilt towards stabilizing prices while maintaining sufficient market liquidity, and the timing of interest rate cuts and reserve requirement ratio cuts may be delayed. (New Society)