China Central Bank Floods Money Market
4.7.12, SHEN HONG
SHANGHAIâ€”China’s central bank has flooded the local money market with cash in recent days, stoking expectations that it may be signaling a broader monetary easing, just as it did two months ago.
Since last week, the People’s Bank of China has ramped up its use of reverse-repurchase operations, an increasingly important tool for pumping short-term liquidity into the banking system. It did something similar in May, shortly before it cut banks’ reserve requirements, freeing up huge amounts of cash that banks could lend out to boost the slowing economy.
The stepped-up use of reverse repos coincides with further signs of …