The Chinese central bank has stepped up its injections of liquidity into the financial system via open market operations in the lead up to the Spring Festival vacation.
The People’s Bank of China (PBOC) made net injections via open market operations of 650 billion yuan in the week from 17 – 21 January, according to data from Wind.
The overnight Shanghai Interbank Offered Rate (SHIBOR) on Thursday held steady at 2.035% for the overnight rate, while declining 1.4 basis points to 2.113% for the 7-day rate, declining 2.6 basis points to 2.431% for the 14-day rate, and 0.4 basis points to 2.418% for the 1-month rate.
The monthly loan prime rates (LPR) announced on 20 January also saw declines, with the 1-year LPR falling 10 basis points to 3.7%, and the 5-year rate falling 5 basis points to 4.6% from 4.65% previously, for its first decline in 20 months.
On 18 January PBOC said that it needed to “further open up its monetary policy tool kit,” as well as flagged the need for “seizing matters and engaging in forward-looking operations” in the lead up to the Spring Festival in February.
Wen Bin (温彬), chief researcher with China Minsheng Bank, expects macro-economic policy to continue to be “forward leaning, with an integration of cross-cyclical and counter-cyclical adjustments, to keep economic operations within rational territory.”