PBoC Might Guide Interbank Rates Up, Still Not Tightening

The People’s Bank of China has scaled back its open-market
operations pretty dramatically in April. After draining RMB602 billion of
liquidity in March through bill and repo sales, the central bank has drained RMB124
billion through April 17. The bank only drained RMB14 billion last week, down
from RMB218 billion three weeks ago. There are several factors behind the
slowdown in liquidity reductions, but the upshot seems to be a slight hike to
yields on the central bank bills in the coming weeks. This could come as early
as tomorrow, when the PBoC will sell RMB40 billion worth of one-year bills.

This entry was posted on Saturday, May 8th, 2010 at 2:22 am and is filed under China Economy. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.