MNI's China Money Market Index Sees Conditions Tighten in September
Introducing the updated MNI China Money Market Index (MMI), formerly the MNI China Liquidity Index, which has been adapted to reflect the PBOC's monetary policy.
- China interbank market liquidity conditions remained ample in September, whilst market participants expect PBOC easing to ease conditions through October, the latest MNI Money Market Index showed.
- The MNI China Money Market Index suggested better liquidity in October
- The MNI China Money Market Current Conditions Index stood at 86.0 in September
- The MNI China PBOC Policy Bias Index picked up through September
Weak credit demand that has trapped interbank liquidity and fuelled the recent bond rally will lead the People’s Bank of China to take a more flexible approach to further injections via its open market operations, while it simultaneously attempts to steepen the yield curve via its bond trades, results from MNI’s China Money Market Index revealed.
The outlook subindex covering the PBOC’s OMO over the coming month showed 67.4% of participants expected a net drain as the PBOC aims to discourage idle funds within the market. The current liquidity conditions subindex also reflected the PBOC’s caution at 86.0 in September – a 2024 peak – up from the previous month’s 32.6, with 79.1% of respondents reporting tighter conditions.