PBOC moves to keep interbank rates inside its new corridor

Large injections of liquidity into the banking system by the People’s Bank (PBOC) have grabbed headlines today. The moves have more to do with offsetting the usual spike in liquidity demand ahead of Chinese New Year than a response to capital outflows or an attempt at monetary easing. More worthy of attention is the PBOC’s apparent shift away from its traditional policy tools in favour of targeting the interbank rate.

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