|A file photo taken on Feb. 23, 2012 shows a pedestrian walking past the headquarters building of the People's Bank of China in Beijing, capital of China. (File photo)
BEIJING, Sept. 6 (Xinhua) -- The People's Bank of China (PBOC), the central bank, halted its efforts to inject liquidity into banks through open market operations this week, renewing speculation that the PBOC may move to ease its monetary policy soon.
Through reverse repurchase agreement (repo) operations on Thursday, the PBOC drained 52 billion yuan (8.2 billion U.S. dollars) of liquidity from the money market this week after pumping 344 billion yuan into banks last month through similar actions.
The liquidity tightening came after the central bank used repos to buy 40 billion yuan in securities from banks with terms of seven and 14 days and hedged against bills and repos due this week.
The yield for seven-day reverse repos dipped 5 basis points to 3.35 percent, while that for 14-day reverse repos remained unchanged at 3.5 percent.
The PBOC may introduce a new parity for short-term borrowing, analysts said, as the central bank has carried out reverse repo operations for 11 consecutive weeks since June 26.
"I think the central bank's lowering of seven-day and 14-day reverse repo yields signals its intention to bring down borrowing costs," said Mou Zhiyang, a fixed-income researcher with China Dragon Securities. "But the impact on the market has been limited, since it was just five basis points."
In China's interbank market, the overnight Shanghai Interbank Offered Rate (Shibor), which measures the cost of interbank borrowing as a key barometer of liquidity, dropped 1.38 basis points to 2.12 percent on Thursday.
The one-week Shibor weakened 2.58 basis points to 3.40 percent, while the two-week Shibor climbed 21.04 basis points.
The market expects more monetary loosening from the central bank in the form of interest rate or reserve requirement ratio cuts in order to buoy the slowing economy.
But a possible rebound in inflation may limit the government's room for policy-easing and leave the central bank in a dilemma, as different sets of predictions indicate that the inflation rate will bounce above 2 percent in August from a 30-month low of 1.8 percent in July.
The National Bureau of Statistics is due to release economic data for August on Sunday.
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BEIJING, Aug. 22 (Xinhua) -- The possibility of a further drop in Chinese banks' reserve requirement ratio (RRR) in the short term has lessened following the central bank's record reverse repurchase operation on Tuesday, the China Securities Journal reported on Wednesday.
The reverse repurchase operation, which totalled 220 billion yuan (34.9 billion U.S. dollars), also marked a record daily high. Offsetting 87 billion yuan due this week, the central bank has made a net liquidity injection of 133 billion yuan this week, the report said, citing data from Wind, a financial information provider. Full story
Central bank to strengthen monetary policy fine-tuning
BEIJING, Aug. 5 (Xinhua) -- China's central bank said Sunday it will strengthen the fine-tuning of its monetary policy in the second half of this year, indicating as many analysts believe that more liquidity may be injected into the world's second largest economy.
The monetary policy should play a counter-cyclical role in the country's economy and credit policies will be improved to shore up the development of the real economy, the People's Bank of China (PBOC) said in a news release on its website. Full story