China Money Rate Rises to Three-Week High on Politburo Meeting

China’s benchmark money-market rate rose to a three-week high after top policy makers signaled a large-scale loosening of monetary policy is unlikely.

The Politburo, the ruling Communist Party’s highest decision-making body, decided at a meeting on April 25 to maintain monetary and fiscal policies, even as the economy faces difficulties, the official Xinhua News Agency reported the same day. China should continue to adopt a stable macro approach, while at the same time keep micro policies flexible to achieve the year’s economic targets, according to Xinhua.

“The comments indicate the chance for a universal monetary policy loosening is slim,” analysts led by Shanghai-based Xu Hanfei at Guotai Junan Securities Co. wrote in a research note today. “Mini-stimulus since March has already started to take effect. It is not necessary for a larger-scale loosening to ensure growth.”

The seven-day repurchase rate, a gauge of interbank funding availability, jumped 51 basis points, or 0.51 percentage point, to 4.02 percent as of 4:20 p.m. in Shanghai, according to a weighted average by the National Interbank Funding Center. That is the highest level since April 3 after an increase of 69 basis point last week.

The People’s Bank of China asked lenders to submit orders for 14- and 28-day repurchase agreements, seven- and 14-day reverse repos and 91-day bills for this week as usual, according to a trader at a primary dealer required to bid at the auctions.

Swap, Bonds

The one-year interest-rate swap, the fixed payment needed to receive the floating seven-day repurchase rate, rose five basis points to 3.84 percent, data compiled by Bloomberg show.

“The relatively benign assessment of the latest economic situation indicates the top leadership believes there is no need for large stimulus plans,” Goldman Sachs Group Inc. economists led by Yu Song in Hong Kong wrote in a research note today. More policies, targeted at supporting certain areas of the economy, will be released in the coming weeks until the economy shows clear signs of recovery, and the government is likely to loosen property policies, according to the note.

The yield on the 4.42 percent government bonds due March 2024 fell three basis points to 4.33 percent, data from the National Interbank Funding Center showed.

— With assistance by Helen Sun

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