China’s central bank boosts liquidity and reduces 14-day reverse repo rate
China’s Central bank, the People’s Bank of China (PBOC), injected 234.6 billion yuan into the banking system through open market operations on Monday, signaling a move to ease monetary conditions. This injection included 160.1 billion yuan via 7-day reverse repos at 1.70% and 74.5 billion yuan via 14-day reverse repos at 1.85%, a slight reduction from the previous rate of 1.95%. While analysts noted that this funding operation does not represent a significant policy easing, it aligns the 14-day repo rate with the 7-day rate, which was cut in July.
This injection comes ahead of China’s National Day holidays starting on Oct. 1, and follows speculation that the PBOC may implement further monetary easing measures in the coming months. Economists are closely monitoring China’s economic performance, as the country faces deflationary pressures and struggles to stimulate growth despite policy measures aimed at boosting domestic spending.
President Xi Jinping recently emphasized the importance of achieving the country’s annual economic and social development goals. The heads of the PBOC, National Financial Regulatory Administration, and China Securities Regulatory Commission will hold a joint news conference on financial support for the economy, indicating a coordinated effort to address economic challenges.
Global brokerages have revised their 2024 growth forecasts for China, forecasting growth below the government’s official target of around 5%. The PBOC’s actions will be closely watched in the coming months as policymakers navigate economic uncertainties and seek to bolster growth in the world’s second-largest economy.
SOURCE
Emma Collins, graduated in Financial Economics from the University of Chicago in the USA in 2016. She has since worked at an asset management firm in New York, where she specializes in investment strategies and portfolio management. Emma has a keen interest in financial analysis and has published several articles in renowned financial journals. Her work focuses on providing actionable insights to investors, and she is known for her forward-thinking approach to managing financial portfolios.