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 12:47 2016 Thursday ,01 September

'La La Land' musical masterpiece dazzles Venice film fest

GMT 12:42 2017 Monday ,20 February

Dalia al-Behairy begins 'Yawmiyat Zoga Mafrosa'

GMT 19:01 2017 Wednesday ,30 August

Oil prices down as US reels from Harvey

GMT 04:19 2017 Monday ,08 May

National forces attack mercenaries in Taiz

GMT 19:21 2017 Sunday ,07 May

Iranian Film Week opens in Baghdad

GMT 21:33 2017 Sunday ,30 July

Arab Quartet meeting kicks off in Bahrain

GMT 17:17 2016 Friday ,07 October

Aleppo bleeds as US and Russia spar

GMT 12:03 2015 Monday ,21 December

Nepal protester killed in constitutional crisis clash

GMT 09:47 2016 Thursday ,22 December

Trump vows to cut F-35 spending, as leaked memo

GMT 21:44 2017 Friday ,15 December

King establishes Hawar Development Committee

GMT 20:57 2017 Tuesday ,16 May

Naval Forces rescue 23 tourists in Hurghada

GMT 12:56 2017 Monday ,11 December

Lyon leave it late, Balotelli with Nice winner

GMT 06:18 2017 Thursday ,19 October

Russian delegation meets with Julphar chairman

GMT 21:20 2017 Monday ,23 October

Nasr, delegation of London Stock Exchange

GMT 14:40 2012 Saturday ,10 March

Magdy Al-Galad steps down

GMT 09:47 2017 Sunday ,12 March

Cat Camp in New York attracts cat lovers

GMT 14:57 2016 Friday ,09 September

Madonna, Ritchie settle child custody dispute

GMT 23:52 2017 Monday ,18 September

UAE economic growth boosting logistics sector
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