The market arguing that the RMB interest rate hike over the past year has finally been confirmed on October 28, 2004. The People's Bank of China formally announced that the benchmark deposit and lending rates of financial institutions will be raised from October 29, 2004 and the floating range of RMB lending rates will be relaxed. And allow the renminbi deposit rate to go down. The benchmark interest rate for one-year deposits of financial institutions increased by 0.27 percentage point, from the current 1.98% to 2.25%, and the one-year benchmark interest rate was raised by 0.27 percentage points from the current 5.31% to 5.58%. The interest rates of other grade deposits and loans have also been adjusted accordingly, and the medium- and long-term upward adjustments have been larger than the short-term ones. At the same time, further liberalize the floating range of financial institutions' loan interest rates. After the news was announced, the price of the London copper off-exchange trade was plummeted by 70 US dollars (at 19:30 on the 28th). The interest rate increase was well-managed, and the news was tightly blocked. After that, there were still many senior people who judged that the possibility of raising interest rates in the near future was extremely small. However, September economic data showed that the CPI rose by 5.2%, only 0.1% lower than in August. At this point, CPI has crossed the 5% inflation “warning line†for four consecutive months. Interested people can basically judge that the RMB interest rate increase is inevitable. How to interpret the market significance of the interest rate increase and the impact on the price of commodity futures are related to the success or failure of investors' investment in the future. For the market significance of raising interest rates, we must understand that it is imperative to raise interest rates. Although the government’s series of macro-control measures have already cooled the economy, this does not mean that China does not need to raise interest rates. The interest rate is lower than normal, causing great distortion of the economy. If the government is unwilling to raise interest rates to normal levels, accumulation will cause China to undergo a financial crisis. This is because: First, China is experiencing an era of negative interest rates, and negative interest rates have artificially expanded investment demand. The excessive increase in fixed investment is a sign; Second, capital inflows have created conditions for excessive investment growth, and excessive investment has also led to accelerated inflation. This round of inflation is the result of rapid growth in investment and supply bottlenecks. Because of the surplus of labor, the increase in wages has degraded the purchasing power of most people. Therefore, this round of economic growth has led to the redistribution of social income from the main working-class to the borrowed minority. Such crushes have increased social pressure due to increased income inequalities; Thirdly, during the credit expansion period, a large number of investment projects have begun to multiply the demand for liquidity, but have previously flown into the country before the Federal Reserve has continuously raised interest rates. The dollar’s ​​anticipation failed to re-emerge, causing domestic liquidity to be strained. Although the official interest rate in China has remained at a very low level for the past few years, many private enterprises have actually failed to lend much needed funds. At the same time, negative interest rates have caused severe savings diversion, thus forming a cash circulation system. This actually reflects the fact that The official funding price - "interest rate" - has been seriously distorted. As for the effect of this rate hike on the price of commodity futures, especially metal futures, we can make a systemic judgement by contacting the central bank in March this year to increase the deposit reserve ratio. It can be said that this rate hike is a tightening of the reserve ratio at the beginning of the year. With the reinforcement of monetary policy, we know that once the direction of expansion and contraction of monetary policy has been transformed, it will be very persistent. The control measures in the first half of the year are focused on the regulation of overheated industries and are partially controlled. However, investment in fixed assets and new construction projects have not been effectively controlled in the process. In September, the number of fixed assets investment did show a slight upward trend, with a monthly increase of 27.9%, 1.6 percentage points higher than in August. The reduction in long-term loans in the last round of regulation and control was modest, and the fact that commodity prices related to capital construction have remained strong at all times is a strong testimony to the large drop in liquidity loans that companies are in urgent need of. This is the inevitable result of the distortion of interest rates. This increase indicates that the government's regulation has expanded from local regulation to overall regulation. It can be expected that if this effect is not obvious after the rate hike, it will continue to raise interest rates. The direct consequence of the rate hike is that the overheating of fixed assets investment and real estate investment will be effectively controlled, and the expansion of investment in these two projects is the more fundamental driving force for metal demand to remain strong, and the boom in demand leads to copper, aluminum, steel, etc. Commodity prices have remained at historically high levels for a long period of time. Related companies are in a period of huge profits. Due to fierce competition in the end consumer goods sector, upstream raw material prices cannot be effectively transmitted downstream. In fact, this round of inflation has evolved into a renewed profit between the industrial chains. distribution. It can be expected that the interest rate hike will effectively reduce the overheating situation of metal demand, so that metal prices can be restored to normal levels and profits can be more reasonably distributed among various industrial chains.
Shandong Xinsuju Steel Co.,Ltd. , https://www.suscoil.com