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China’s Borrowing Cost Slump Shows Limits of PBOC Policy Easing

  • Money supply growth exceeded credit growth in last 3 months
  • Excess cash isn’t getting funneled to the real economy: Citic
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There is so much cash sloshing around China’s banking system and so little appetite for loans that a key rate has dropped to a level unseen since January 2021.

The cost to borrow in the overnight repo market fell below 1% on Wednesday, down 93 basis points this month, in another sign that much of the liquidity the People’s Bank of China is providing is sitting in banks.