Chinese central bank - the People's Bank of China (PBOC) sold 50 billion yuan 7D reverse repos Thursday, but it drained 70 billion yuan from local financial system this week.
In spite of this, China's financial system remained still fluid at present. By Wednesday, money market rates stayed at low levels and were mostly little changed. What's more, after inflation eased in September, more leeway was left for China to loosen its monetary policy, said Song Yu, an economist of Goldman Sachs and Gaohua Securities.
Before the yearend, a 25 basis points (bp) of benchmark interest cut and 100 bps of required reserve ratio cut were expectable, forecasted Song, adding that Chinese policy makers might also use fiscal policies and quasi-fiscal policies to boost the economy.
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