Economy Apr 02

Central bank skips reverse repos

PBoC satisfied that liquidity is sufficient

by Xu Jiangshan and Yuan Tianyi
China’s central bank skips reverse repos

(ATF) – The People's Bank of China (PBOC), China’s central bank, skipped reverse repos on Thursday, citing reasonably sufficient liquidity in the money market.

No reverse repos matured Thursday.

The central bank injected 50 billion yuan ($7.43 billion) into the market on Monday through seven-day reverse repos, while cutting the interest rate by 20 basis points to 2.2 percent to lower lending costs and offset the economic shock of the novel coronavirus outbreak.

The move, the first injection since February 17, took the market by surprise and triggered expectations of more cuts in other benchmarks, Asia Times Financial reported. 

The likely cut in deposit rate would reduce banks’ net interest margins by 16.8 basis points as policymakers are keen to see banks passing on their profits to the real economy.