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PBOC Likely To Further Loose As Gov Bond Sales Peak

CHINA PRESS
MNI (Singapore)

The People’s Bank of China will likely increase liquidity injections in August and September as sales of new local government bonds could soar due to local authorities aiming to finish selling their full quota of special bonds by the end of Q3. A total of CNY1.58 trillion new special bonds are expected to be issued in Q3, and CNY196 billion were sold in July. The PBOC may increase the amount of open market operations, roll over maturing medium-term lending facilities with excessive amounts, or cut the reserve requirement ratio (RRR), said Wang Yifeng, chief financial analyst at Everbright Securities. The central bank may cut RRR by 25bp in September ahead of a larger amount of MLF maturities, also draining liquidity in Q4, said Hu Xiaoli, analyst at CIB Research. (Source: China Securities Journal)

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