SHANGHAI (Reuters) – China’s central bank is poised to fill liquidity shortfalls ahead of the Lunar New Year holiday, reported the China Securities Journal, even as markets divided over the possibility of further monetary easing in the world’s second-largest economy .
The People’s Bank of China is expected to increase injections through open market operations in the banking system from the second half of the month to meet the growing demand for money from businesses and households ahead of the week-long holiday, it reported. the official newspaper this Wednesday. The Lunar New Year holiday starts on January 31st this year.
“Many financial institutions believe it is certain that the central bank will maintain reasonably ample liquidity… and the bank is likely to use a variety of tools, including reverse repurchases and medium-term lending instruments (MLF) to meet demand from reasonable funding institutions and to provide support during the Lunar New Year holiday,” the newspaper said.
Ming Ming, chief economist at Citic Securities, projects the liquidity gap in the banking system to reach 2.6 trillion yuan ($408.08 billion) in January.
(By Winni Zhou and Andrew Galbraith)
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