The liquidity injection by the PBOC this week was the largest on record. But it was mainly intended to manage the usual cash crunch ahead of Chinese New Year rather than loosen monetary conditions. The main constraint on further easing at the moment is the floor to interbank rates provided by the PBOC’s reverse repo. We expect this to be lowered before long. In the coming week’s data, the Q4 GDP numbers will be the focus of attention. Today’s revisions to the 2017 figures should provide a slightly more flattering base for comparison.
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