Analysts at ANZ explained that the PBOC repriced the cost of short-term funding by raising the 7-day reverse repo rate by 10bps to 2.35%.
“This action is significant as it suggests the PBoC will adopt a flexible interest rate regime in 2017.
Since the PBoC has held the reverse repo rate at 2.25% since October 2015, this change is ground-breaking and suggests that the central bank will change the onshore rates more frequently.
We stick to our call for a prudent monetary policy stance but the policy actions associated with this stance need to be reinterpreted.
The bottom line is to prevent a cash crunch amidst deleveraging and deflating financial bubbles in certain sectors.
Going forward, the PBoC will continue to focus on establishing a yield curve with interest rate risks tilted towards the upside.”
You may be interested
Opinion | What is a Security Token Offering (STO) and Why You Need an AdvisorBrian Evans - Oct 08, 2018
About the Author: Jaron Lukasiewicz is the CEO and founder of Influential Capital. Jaron has been an executive in the industry since 2012, previously serving as CEO of Coinsetter, one…
World Economic Forum: Blockchains improve Global EconomyBrian Evans - Oct 08, 2018
Beginning as a technology for financial ledgers only, blockchains have grown to become the corporate hype word around the globe. It’s touted as the invention that will…
‘Rehypothecation’: More about the Wall Street Practice that Could Ruin BitcoinBrian Evans - Oct 08, 2018
Note: This is part 4 in a multi-part article series exploring rehypothecation and commingling in bitcoin and other cryptocurrency markets. Part 1 and part 2 are interviews…