China’s central bank aims to enrich monetary policy tools
The PBOC said that it will extend the maturities of reverse repurchase agreements to optimise the stability and neutrality of funding in the financial system in a quarterly monetary policy implementation report released late Friday, which accounts for the monetary policy adopted in the second quarter.
The central bank will study increasing tenors to avoid the misinterpretation of prudent and neutral monetary policy settings due to its intervention to the market liquidity to offset external factors such as fiscal revenue, government spending and market expectations. It will also make the less-than-seven days short-term liquidity operations routine and add operations with a two-month maturity.
The central bank has been managing interbank liquidity with its monetary policy tools while keeping traditional benchmark interest rates and required reserve ratios on hold since February 2016.
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