PBOC May Not Cut Deposit Reserves for Banks: Herald

The PBOC is not likely to cut required deposit-reserve ratios to help banks deal with deposit shortages but may use OMOs and MLFs to help when bond issuances or loans are high, the 21st Century Business Herald reported citing an unnamed chief analyst with a securities house. To lower financing costs for non-financial firms, the PBOC required commercial banks to step back from offering high-interest-rate deposit products, resulting in money flowing out of banks, particularly small-and-middle sized banks. The interest rates of interbank deposits issued by those banks have risen to 3.49% from 2%, the lowest point reached in May, the source said adding that monetary policy was likely to maintain the current "tight balance".