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Editorial: Why China is Shifting to a ‘Neutral’ Monetary Policy Stance

Ever since the Central Economic Work Conference outlined a prudent and neutral monetary policy stance in December, the central bank has pushed up lending costs after the Lunar New Year in late January through a series of open-market operations, including raising the rates or medium-term lending facilities (MLFs), standing lending facility (SLF) loans and reverse repo agreements. Although the People’s Bank of China stated that it has no intention to hike the benchmark interest rate, its recent moves through liquidity tools have influenced market sentiment and signaled China’s shift toward a new credit-tightening cycle.

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