The People's Bank of China, China's central bank, conducted 160 billion yuan worth of 7-day reverse repos at an annualized yield of 2.25 percent in Thursday's open market operations, the biggest amount seen this year.
Given that 200 billion yuan worth of reverse repos are due this week, together with the 80 billion yuan of 7-day reverse repos offered on Tuesday, the central bank injected a net 40 billion yuan into the financial system via this week's open market operations.
Haitong Securities predicted that the central bank is unlikely to lower interest rate in the short term, but the possibility of future required reserve ratio (RRR) cut still exists. Guotai Junan Securities noted that the central bank was expected to cut its RRR by 50 pbs before the Spring Festival holiday in a bid to keep the liquidity environment stable.
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