china’s central bank lifts 2 of its lending rates to rein in debt
Last Updated : GMT 06:49:16
Arab Today, arab today
Arab Today, arab today
Last Updated : GMT 06:49:16
Arab Today, arab today

China’s central bank lifts 2 of its lending rates to rein in debt

Arab Today, arab today

Arab Today, arab today China’s central bank lifts 2 of its lending rates to rein in debt

Pedestrians walk past a Bank of China branch in Beijing
Shanghai - Arab Today

China’s central bank raised interest rates on a key funding tool, the medium-term lending facility (MLF), on Tuesday in its latest bid to cut debt levels and bolster financial stability.
Policymakers are trying to keep the world’s second-largest economy sufficiently greased to counter an economic slowdown while also managing risks created by an explosive growth in debt that has fueled a housing boom.
China’s benchmark bond futures prices fell at the end of the trading day on the higher rates, as the People’s Bank of China (PBOC) also rolled over maturing MLF loans.
The central bank raised the interest rate for one-year and six-month MLFs by 10 basis points each to 3.1 percent and 2.95 percent, respectively.
The move was designed “to maintain basic stability in the banking system,” the PBOC said in a statement.
Analysts suspected this increase in the cost of one of the main money market funding avenues for banks was in line with the central bank’s broader objective of reining in speculative investment in the economy.
The MLF is a supplementary policy tool the central bank uses to manage liquidity conditions and medium-term interest rates in the banking system and money markets.
Tuesday’s move was the first rate rise in years, catching many market participants off guard.
Xia Haojie, a bond futures analyst at Guosen Futures, said higher MLF rates were intended to encourage deleveraging.
“Low interbank yields don’t reflect real borrowing costs in the real economy and have to trend higher, otherwise easy funding would only be used by financial institutions to make speculative arbitrage,” Xia said.
“Meanwhile, yuan depreciation pressure also puts upward pressure on Chinese yields.”
A source at a Chinese bank in Shanghai was surprised about the timing, given the generally tight liquidity conditions ahead of the week-long holiday.
“I have no idea why the bank released such bad news ahead of the holiday. The purpose of raising the interest rates on MLFs is still to cut leverage at financial institutions,” said the source.
The authorities have been tweaking policy settings to discourage excessive borrowing and deter capital outflows, including last year’s introduction of longer tenor open market funding operations and increased reporting requirements for overseas cash transfers.
The last time the PBOC adjusted interest rates on MLF loans was February 2016, when it lowered offered rates for six-month and one-year tenors. And the last explicit policy tightening was in 2011, when the central bank raised benchmark lending rates.
But Tommy Xie, a Singapore-based economist at OCBC Bank, said it might be too early to conclude that China had embarked upon a fresh tightening cycle.
“The next important thing to monitor is the interest rate for open market operations. Our forecast for 2017 benchmark lending and deposit rates remains unchanged for now,” he wrote in a report.
On Tuesday, the PBOC said it lent 245.5 billion yuan ($35.8 billion) to 22 financial institutions via MLFs.

Source: Arab News

arabstoday
arabstoday

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

china’s central bank lifts 2 of its lending rates to rein in debt china’s central bank lifts 2 of its lending rates to rein in debt

 



Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

china’s central bank lifts 2 of its lending rates to rein in debt china’s central bank lifts 2 of its lending rates to rein in debt

 



GMT 10:06 2012 Saturday ,28 July

Querrey advances at ATP LA Open

GMT 21:15 2017 Thursday ,01 June

Trump condemns deadly Kabul explosion

GMT 02:15 2017 Thursday ,24 August

Is your country on the Qatar free entry list of 80?

GMT 19:48 2016 Monday ,03 October

Controversial boxing champ Tyson Fury retires

GMT 08:20 2015 Tuesday ,08 December

PC market woes show no sign of easing

GMT 17:27 2017 Tuesday ,25 April

20 Yemeni soldiers killed, injured in explosion

GMT 11:52 2017 Saturday ,30 December

OIC condemns Mar Mina Church attack

GMT 00:03 2017 Saturday ,25 March

Arab Meeting to Examine Anti-Corruption Methods

GMT 13:12 2017 Thursday ,20 April

Deputy premier meets Arab League chief

GMT 14:13 2014 Friday ,10 January

Opel Astra GTC

GMT 18:27 2016 Tuesday ,02 August

Turkish Foreign Minister arrives in Islamabad

GMT 11:27 2016 Tuesday ,13 December

Saudi woman arrested for challenging social norms

GMT 19:56 2017 Thursday ,09 March

Qatar Pavilion Opens at ITB Berlin

GMT 23:34 2013 Thursday ,07 February

New BMW 3 Series Gran Turismo

GMT 12:57 2017 Friday ,13 October

JPMorgan open to digital money if regulated

GMT 04:38 2017 Friday ,10 March

ADNOC opens fifth ADNOC Xpress

GMT 10:30 2017 Friday ,10 November

BDF military contingent honoured

GMT 17:37 2017 Tuesday ,24 January

China jails former Sinopec president for graft

GMT 19:34 2017 Sunday ,14 May

Austria centre-right calls for snap elections

GMT 14:54 2014 Saturday ,29 November

Wall cladding, wallpaper, fabric and wood!
Arab Today, arab today
 
 Arab Today Facebook,arab today facebook  Arab Today Twitter,arab today twitter Arab Today Rss,arab today rss  Arab Today Youtube,arab today youtube  Arab Today Youtube,arab today youtube

Maintained and developed by Arabs Today Group SAL.
All rights reserved to Arab Today Media Group 2021 ©

Maintained and developed by Arabs Today Group SAL.
All rights reserved to Arab Today Media Group 2021 ©

arabstoday arabstoday arabstoday arabstoday
arabstoday arabstoday arabstoday
arabstoday
بناية النخيل - رأس النبع _ خلف السفارة الفرنسية _بيروت - لبنان
arabstoday, Arabstoday, Arabstoday