China’s central bank continues open market operations, rates unchanged

BEIJING — China's central bank continued to inject liquidity into the financial system via open market operations, with rates unchanged despite an interest rate hike in the United States.

The People's Bank of China (PBOC) pumped 150 billion yuan (about $23.5 billion) into the market through reverse repos, with 80 billion yuan of contracts maturing, a net injection of 70 billion yuan.

The PBOC conducted 70 billion yuan of seven-day reverse repos at an interest rate of 2.55 percent, 50 billion yuan of 14-day reverse repos at 2.7 percent, and 30 billion yuan of 28-day operations at 2.85 percent. All rates were unchanged from previous operations.

The US Federal Reserve on June 13 raised short-term interest rates by a quarter of a percentage point, its second rate hike this year and the seventh since late 2015.

The operations on June 14 followed net injections of 30 billion yuan on June 12 and 70 billion on June 13.

A reverse repo is a process by which the central bank bids and buys securities from commercial banks, with an agreement to sell them back in the future.

Analysts believe the moves were made to stabilize market expectations as liquidity demand could increase due to taxes and required reserves as well as more maturing securities.

China has decided to maintain a prudent and neutral monetary policy in 2018 as it strives to balance growth and risk prevention.