Trends to Watch in This Year's Monetary Policy

The central bank conducted two repos last week, mopping up 50 billion yuan from the market, while 860 billion yuan worth of reverse repos came due.

That removed a record-breaking 910 billion yuan from circulation. Taking some liquidity off the market is in line with what the central bank usually does after the Spring Festival holiday.

Judging by interest rates, there is still plenty of liquidity to go around. It would be a stretch to say that the central bank is tightening up liquidity now. More likely, it is sending out a message that the current loose environment is not going to last.