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China Central Bank Signals Shift in Monetary Policy Focus

The People’s Bank of China (above), China’ central bank, is signaling a decreased emphasis on deleveraging in its monetary policy, experts said. Photo: IC
The People’s Bank of China (above), China’ central bank, is signaling a decreased emphasis on deleveraging in its monetary policy, experts said. Photo: IC

A rare announcement by the People’s Bank of China (PBOC) that it offered liquidity to banks through its Pledged Supplementary Lending (PSL) facility, a tool to encourage credit to favored sectors, has provided another signal that the central bank is fine-tuning monetary policy to reduce some of its emphasis on deleveraging.

The PBOC doesn’t usually report its PSL transactions until the beginning of the following month, when it releases a summary of its liquidity management operations, which include other tools such as the Medium-Term Lending Facility. But the central bank announced on Monday it had handed out 80.1 billion yuan ($12.6 billion) through PSL, the same day the loans were made.

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