PBOC may cut banks’ RRR earlier than expected to maintain reasonable ample liquidity – state media
MACRO POLICY & REGULATION
PBOC may cut banks’ RRR earlier than expected to maintain reasonable ample liquidity – state media
MACRO POLICY & REGULATION

PBOC may cut banks’ RRR earlier than expected to maintain reasonable ample liquidity – state media

 

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After the recent interest rate cuts, interest rates in China’s money market did not decline but climbed instead, showing signs a marginal tightening of funding situation, said state media China Securities Journal in an article on Tuesday. 

That’s a temporary situation, which may be related to the increase in local government bond issuance, the report said, citing experts.

In September, market demand for liquidity will rise due to local government bond issuance and other factors including end-of-quarter effects and festive holidays, it said.

In order to maintain a reasonable ample liquidity, the PBOC is expected to use a variety of policy tools to supply reasonably liquidity, and a cut to banks’ reserve requirement ratio (RRR) could come earlier than expected, it said.