''In a sign that China's central bank isn't going to relax the pressure soon, the People's Bank of China refrained from adding cash to the financial system Tuesday. It normally conducts so-called open market operations on Tuesdays and Thursdays by adjusting short-term loans to commercial lenders, which controls the supply of credit''.
''An interbank benchmark for funding costs called the seven-day repo rate was at 6.82% Tuesday, close to the 6.89% rate at Monday's close and a record 6.90% on Friday. It had averaged around 3.30% this year before the liquidity crunch began at the end of last month''.
''An interbank benchmark for funding costs called the seven-day repo rate was at 6.82% Tuesday, close to the 6.89% rate at Monday's close and a record 6.90% on Friday. It had averaged around 3.30% this year before the liquidity crunch began at the end of last month''.
''Analysts also say the cool response from the central bank may mean it regards the current funding squeeze more as a brief episode affecting only certain parts of the economy. Complicating the picture, data Tuesday showed property prices continued to rise in May, which may hobble policy makers' appetite to ease credit as they attempt to clamp down on the stubbornly high real-estate prices that risk a bubble.
"The authorities have plenty of firepower to address the liquidity problem and provide liquidity to the interbank market," said Fitch Ratings senior director Charlene Chu. She says that because the central bank isn't pumping cash into the system, that suggests it is tolerant of the situation so far''.
