BEIJING, Jan. 28 (Xinhua) -- China's recent open market operations (OMOs) did not represent systemic tightening of monetary policies, reported Xinhua Finance citing a research report of China International Capital Corporation (CICC) Thursday.
On Wednesday, Chinese central bank, the People's Bank of China (PBOC) released an announcement saying that it conducted 180 billion yuan of reverse repos to offset the 280 billion yuan reverse repos expiry Wednesday, draining as a result 100 billion yuan of liquidity via the open market.
PBOC said the move was to maintain reasonably fluid liquidity amid the banking system. Market watchers held that as the end of January draws nearer and nearer, significant increase in fiscal expenditure always weight on the liquidity of banking sector.
In the short term, money market interest rates may fluctuate in a certain range, predicted the CICC report.
Currently, there are many factors affecting China's monetary policy trend and apart from inflation and economic growth, the housing sector and financial risks are also important factors to consider for the monetary policy makers, according to the CICC report.
In spite of the rapid gross domestic product (GDP) growth in the fourth quarter of 2020, the demand caught up supply, resulting in no overheating in the economy especially when the recovery remained imbalanced and unstable.
This year, the CICC report forecasted that inflation is likely to be tepid and growth of consumer price index (CPI) for service sector may remain weak.
Under such circumstances, the temporary resurgence of producer price index (PPI) due to low comparable data in 2020 is hard to cause monetary tightening.
In view of the pending debt repayment peak in March and April this year, China's macro policy may be a policy composite of tight credit supply, easy monetary environment and loose fiscal policy, the CICC report said. (Edited by Duan Jing with Xinhua Silk Road, duanjing@xinhua.org)
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