There were some expectations the People's Bank of China would cut their Reserve Requirement Ratio last Friday.
An alternative expectation was for a new Medium-term Lending Facility (MLF) to be conducted instead. As we know, the MLF won out:
- People's Bank of China issues a 500m yuan MLF
Goldman Sachs says to expect more of the same ahead. No longer expect China to cut the RRR (i.e. the amount of cash banks must hold in reserve this year). Instead, the People's Bank of China might rely on:
- open market operations,
- its medium-term lending facility
- and targeted tools
to keep liquidity supply and demand relatively stable. And add this:
- “Amid tight regulations on property financing, shadow banking, and local government borrowing, as well as increased supervision on anti-corruption, credit demand has remained soft.”
Info from GS comes via this Bloomberg report (may be gated) .
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ps. There is plenty of data to come from China today:
