PBOC Studies Plan to Narrow Rate Corridor While Warning of Bond Risks

(Bloomberg) — China’s central bank is considering narrowing the range within which short-term interest rates can fluctuate, extending an overhaul of its policy toolkit that aims to guide the market more effectively.

The People’s Bank of China (PBOC) is considering how to “reasonably” narrow the corridor, according to a quarterly monetary policy report published Friday. A tighter band would help the bank steer market rates so they fluctuate around a level it targets.