What does the bank interest rate adjustment mean?

As the price of capital, interest rate is influenced by many decisive and influential factors, which is very complicated. In other words, the level and adjustment of interest rates are ultimately determined by the comprehensive influence of various complex factors. \ r \ nIn recent years, the pace of interest rate adjustment in China banks has been very frequent, which is incredible to many people. In fact, it is based on the fact that interest rate adjustment must respect objective economic laws. It is impossible for anyone to pat his head in the office to introduce such a policy. \ r \ Interest rate adjustment should mainly consider two aspects: First, what is the purpose? Second, what is the basis for adjustment? \ r \ From the purpose of interest rate adjustment, it mainly solves the following problems: ① Adjusting the total supply and demand of social funds. Other things being equal, raising the bank interest rate will help attract idle funds to deposit in the bank, thus delaying the realization of the purchasing power of social consumer goods and reducing the total social demand. At the same time, the increase in bank interest rates will also increase the cost of corporate loans, curb commodity sales and reduce corporate profits. \ r \ Therefore, when the total demand of social funds exceeds the total supply, which leads to inflation, banks will intervene by raising interest rates. Lowering bank interest rates will have the opposite effect. \r\n② Optimize the social industrial structure \r\n Implement preferential interest rate policy for industries that need support and give priority to development, and the government can support their development well financially; On the contrary, for industries or enterprises that need to limit their development, they can increase their input costs by appropriately raising bank interest rates. \ r \ The combination of the two can well adjust social resources and realize the optimal allocation of industrial structure. ③ Adjusting the money supply When the money supply of the whole society exceeds the demand, it will lead to inflation and price rise. Therefore, the government can adjust the money supply by adjusting the bank interest rate. This is mainly to reduce the scale of credit and money supply by raising interest rates, so as to achieve the purpose of reducing inflation and stabilizing prices. (4) Promote enterprises to improve economic benefits. By raising interest rates, banks indirectly force enterprises to continuously strengthen economic accounting and reduce the interest burden, which objectively improves the management level of enterprises and promotes the economic benefits of enterprises and the whole society. If the enterprise doesn't realize this, or can't do it at all, once the efficiency of capital use of the whole enterprise is not enough for bank interest, or the loan can't be returned normally when it expires, it may be forced to close down. ⑤ Adjusting residents' savings banks can attract residents to deposit their spare money in banks, reduce the total amount of social money, and curb inflation by raising interest rates. By lowering the interest rate level, savings can be driven from banks to consumption areas and consumption can be promoted. In this process, the adjustment of interest rate will have a substantial impact on residents' savings structure, and adjust the proportion of physical purchase and stock investment. ⑥ By adjusting the interest rate level to adjust the balance of payments, banks will not only have an impact on the domestic financial market, but also have a linkage effect on the international financial market to adjust the balance of payments. Specifically, if the domestic interest rate level is higher than the international level, it will attract foreign investment to China, resulting in international income greater than international expenditure. Or conversely, the purpose of interest rate adjustment from Dallas to the auditorium is to maintain the basic balance of international payments, at least there can be no big fluctuations, otherwise it will affect the national financial security. In order to achieve the above goals, interest rate adjustment must consider the following main factors in many complicated relationships: ① Social average profit rate Marx believes that interest is a part of profit. Therefore, when adjusting interest rates, banks will inevitably pay attention to the average profit rate of society, and will neither lower interest rates because of the low profit rate of a few enterprises, nor raise interest rates because of the high profit rate of a few enterprises. Generally speaking, the higher the social average profit rate, the higher the interest rate level, otherwise it can not correctly reflect the leverage of interest rates; The lower the average social profit rate, the lower the interest rate level, otherwise most enterprises will not be able to bear such a high interest rate level. The highest interest rate level can not be higher than the average social profit rate, but the lowest can not be lower than zero. \r\n② The adjustment of capital supply and interest rate level must refer to the whole social capital supply. As the price of capital, interest rate, like ordinary commodities, is bound to be affected by the supply and demand of money. The more mature the market economy is, the greater the influence of capital supply on interest rate adjustment, and the greater the adjustment of interest rate on capital supply. \ r \ Generally speaking, the interest rate will rise when the capital supply is insufficient, and will fall when the capital supply exceeds the demand. On the one hand, the supply of funds will prompt banks to adjust interest rates; On the other hand, the adjustment of interest rate level will also improve the supply of funds, and the two are complementary. \ r \ When the average social profit rate is fixed, the adjustment of interest rate is actually to re-divide the average social profit into two parts: interest and enterprise profit, and this ratio should respect the competitive relationship between the supply and demand of loan capital. \ r \ nIn China, due to the lack of capital resources in the whole society, special attention is paid to the supply and demand of funds when adjusting the interest rate level, which is also the main reason why China has neither liberalized the interest rate level nor adjusted the interest rate level completely according to the supply of funds. \r\n③ National economic policy \ r \ nInterest rate level is an important aspect of national economic policy's intervention in social and economic life. The national economic policy, especially the monetary policy of the central bank, is consistent with the direction and effect of the bank's interest rate policy. \ r \ nFor example, after the establishment of the People's Republic of China (PRC) (PRC), China has long implemented a low interest rate policy in order to stabilize prices and stabilize the market. 1978 after the reform and opening up, some departments and enterprises took the lead in implementing differential interest rates, which reflected the purpose of national policy guidance and restraint. \ r \ There is no doubt that the economic development strategy, speed and direction formulated by the state in a certain period will objectively determine the capital demand and capital flow. It is conceivable that China will keep interest rates low for a long time to come and implement differentiated interest rate policies for different industries. \r\n④ Bank cost \r\nAs mentioned above, interest rates include deposit interest rate and loan interest rate. The difference between loan interest rate and deposit interest rate directly determines the profitability of banks. Therefore, when adjusting the interest rate level, the cost of the bank will inevitably be considered to see if the bank can bear it. \ r \ nOnly when the interest income obtained from bank loans completely covers the interest and other business expenses needed to absorb deposits, and there is a surplus on this basis, banks can conduct business normally and have the enthusiasm to conduct business. Therefore, the bank loan interest rate must be higher than the deposit interest rate, and a reasonable spread is needed between them. Especially in China, the profits of banks mainly depend on interest income, which is more important. ⑤ Price level It is generally believed that the interest rate of bank deposits must be higher than the inflation rate, otherwise people's money in the bank will not only not increase in value, but also suffer the loss of principal, thus prompting depositors to withdraw their deposits and snap up goods. The bank loan interest rate is higher than the deposit interest rate, so it should be higher than the inflation rate. If the loan interest rate is lower than the inflation rate, the bank will suffer the loss of principal. The more loans are issued, the greater the loss, and the normal business will be unsustainable. On the contrary, loan enterprises can reduce the debt burden, and get extra income from the difference between loan interest rate and inflation rate, and induce enterprises to do everything possible to expand the loan amount, thus aggravating the shortage of capital supply. ⑥ International interest rate level The adjustment of bank interest rate must also consider the level of international interest rate. If the domestic bank interest rate is higher than the international level, foreign capital will flood in, leading to the strengthening of liquidity in the banking system and the decline of bank interest rate; On the contrary, if the domestic bank interest rate is lower than the international level, capital will flow abroad, which will reduce the liquidity of the banking system and push the bank interest rate up. The higher the market interest rate, the greater the role of the above factors. The finishing touch of financial interest rate adjustment is mainly to respect the requirements of the law of value.