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PBOC May Lower RRRs: Brokerage

CHINA PRESS
MNI (Sydney)

The market should have no fear of monetary tightening because the PBOC may need to lower banks' reserve ratios in September to counter the growing demand for liquidity, according to a research note from Guohai Securities. The central bank's daily OMOs may not be sufficient to satisfy liquidity needs given sales of local government bonds and national debt are forecast to surge in August and September, the brokerage said. In addition, the excess reserve rate in Q2 plunged 0.5% from Q1, it said. The PBOC may even lower its relending rate given that it mentioned the significance of structural tools in its executive report published last week, Guohai Securities said.

MNI Sydney Bureau | +61-405-322-399 | lachlan.colquhoun.ext@marketnews.com
MNI Sydney Bureau | +61-405-322-399 | lachlan.colquhoun.ext@marketnews.com

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