Without a policy announcement, China’s central bank has effectively tightened monetary conditions in recent weeks, an analysis of its transactions shows.
The People’s Bank of China has cut back on seven-day open-market operations and is instead injecting more funds through 14-day and 28-day contracts. That’s had the effect of raising short-term borrowing costs and pressing up bond yields. It’s another sign of selective tightening by the PBOC that’s reinforced the views of many economists that China has turned the corner away from monetary stimulus.
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David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
