The PBOC's RRR cut earlier this month...>

CHINA PRESS: The PBOC's RRR cut earlier this month confirms that monetary policy

has been slightly adjusted to a neutral status or even neutral-leaning loose

status, China Securities Journal reported, even though it allowed the use of

capital released by the cut to replace banks' borrowing from the central bank. 

  - As the overall monetary policy is still prudent and neutral in order to

avoid overleveraging in the financial sector, money supply will not be too loose

- though this year's liquidity could be better than last year; 

  - Liquidity in the market has been very tight recently, partly due to the peak

of tax payments; the PBOC also drained a total CNY570 billion liquidity via open

market operations in the four weeks before last week, the newspaper said; 

  - As the RRR cut will be effective as of Wednesday and fiscal expense will

increase at the end of this month, the tightness of money supply will ease.