PBOC signals stable rates despite draining liquidity – China Press

Dhwani Mehta FXStreet

Markets should not wrongly interpret the People’s Bank of China’s (PBOC) liquidity withdrawal as a policy signal, the Chinese central bank run newspaper - Financial News said in its opinion editorial on Friday.

Key quotes

“The market should not overinterpret recent moves by the PBOC to drain liquidity from the market on the first post-holiday trading day this week.”

“The PBOC had signaled it intends to keep interest rates stable even as it unexpectedly drained CNY260 billion this week.”

“The weighted average interest rate of DR007 remained stable at 2.23%.”

“The PBOC is focused on short-term benchmark rates while the amount of liquidity injected or drained in OMOs vary according to cash conditions, fiscal and market demand.”

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