China's central bank kept a key policy rate steady in November and drained billions in liquidity from the financial system via a medium-term liquidity management tool.
The People's Bank of China on Monday injected 900 billion yuan of liquidity, or about $124.26 billion, into the banking system via its one-year medium-term lending facility at an unchanged rate of 2.00%. That compared with a total of 1.45 trillion yuan of such loans due this month, representing a net drain of 550 billion yuan in November.
In recent months, Chinese authorities have been recasting the PBOC's seven-day reverse repo rate as the main policy rate while letting the shorter-term operation play a bigger role in managing liquidity, a practice more in line with those of Western central banks.
Draining cash via the MLF tool helps facilitate the shift, economists say. The central bank is likely to press ahead with easing as officials look to boost credit demand and reinvigorate financial markets.
Standard Chartered maintains its call for a 25-basis-point cut to lenders' reserves requirement ratio to meet liquidity demand, economist Hunter Chan said in a commentary.
The PBOC may also increase the size of outright reverse repurchase operations and treasury bond net purchases, Chan said.
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(END) Dow Jones Newswires
11-24-24 2134ET
