(Bloomberg) -- China’s central bank only rolled over about half of the funds coming due through one of its policy tools Wednesday, a move that strategists interpreted as a signal that liquidity will be less loose.
The People’s Bank of China offered 200 billion yuan of liquidity in the open market to major financial institutions via the medium-term lending tool as 366.5 billion yuan of debt matured. The funding was sold at 3.3 percent for the one-year tenor, the PBOC said, in the first liquidity offer via the Medium-term Lending Facility in four months. The central bank also offered 160 billion yuan of seven-day money via open market operations. The overnight interbank rate climbed to a four-year high.
"It indicates the central bank is not worried about economic growth, while paying attention to financial stability and seeking to avert asset bubbles," said Gao Qi, a currency strategist at Scotiabank in Singapore. "Bond yields should rise further."
With the stock market booming and warnings about a potential resurgence in the housing market, officials are faced with the tricky task of providing stimulus without fueling speculation. Data Wednesday showed the economy held up in the first quarter, with gross domestic product rising 6.4 percent from a year earlier and factory output increasing faster than expected.
To contact Bloomberg News staff for this story: Yinan Zhao in Beijing at yzhao300@bloomberg.net;Livia Yap in Singapore at lyap14@bloomberg.net
To contact the editors responsible for this story: Jeffrey Black at jblack25@bloomberg.net, James Mayger, Richard Frost
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