(Yicai Global) April 10 -- China's central bank has withdrawn from open market operations for over two weeks in a row, causing interbank interest rates to ascend.
The People's Bank of China has stopped selling or buying government securities from other lenders for the 15th day, saying that the liquidity in the system is at a "relatively high level." Interest rates began to move higher on the interbank market today, led by short-term rates.
No reverse repurchase agreements will reach maturity during the day, which should buoy liquidity. The central bank usually buys reverse repos from commercial lenders and promises to sell them back on a specified date at a higher price, which represents a kind of a loan.
China will continue to adopt a prudent monetary policy that will be eased or tightened to the right degree, PBOC's Governor Yi Gang said last month.
"Although we no longer use the term 'neutral,' the essence of our prudent monetary policy has not changed," Yi said, adding that increases in M2 money supply and total social financing should be in keeping with the nation's nominal GDP growth. M2 includes cash and checking deposits.
Editor: Emmi Laine