China’s central bank will keep money-market rates at a reasonable level and seasonal forces that have driven them up will fade, a People’s Bank of China (PBOC) official said.
China’s liquidity risks are controllable and the central bank will closely monitor rates going forward, Ling Tao (淩濤), deputy director of the PBOC’s Shanghai branch, said at a briefing in Shanghai.
The comments build on a PBOC statement released on Monday which said that there is a reasonable amount of liquidity in the system and urging banks to control risks from lending.
Ling is the first PBOC official to discuss publicly the increase in rates since a cash squeeze that sent the overnight repurchase rate to a record last week.
Chinese Premier Li Keqiang (李克強) is seeking to wring speculative lending out of the nation’s banking system after credit expansion outpaced China’s economic growth.
Chinese stocks whipsawed yesterday and the benchmark seven-day repurchase rate rose after falling for two days. The Shanghai Composite Index fell 0.2 percent at the close after declining as much as 5.8 percent.
Ling’s remarks precede the annual Lujiazui Forum financial conference starting tomorrow. The statement posted on the PBOC’s Web site on Monday was a notice, dated June 17, originally sent to its regional offices and China’s major banks.
The PBOC did not give a reason for the time lag in releasing the statement.
“The central bank can be a little bit more transparent with the market — for instance, it’s really unnecessary to wait for a whole week before it published the liquidity management notice yesterday,” said Ken Peng (彭墾), a BNP Paribas SA economist in Beijing.
“The Shanghai official’s comment, had it come a few days earlier, may have helped to calm the market a bit,” he said.