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China’s Mounting Risks Set Stage for PBOC to Rein In Stimulus

  • Economists expect 400 billion yuan of MLF rollover: survey
  • PBOC needs to prevent rising bond leverage: Absolute Strategy
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China may be ready to curb some of the excess liquidity sloshing in the banking system as it turns its focus to mitigating risks in the financial industry.

The first sign of that could come at Monday’s medium-term lending facility operation. Eight out of 12 economists and analysts polled by Bloomberg are forecasting that the People’s Bank of China will withdraw cash through MLF for the first time this year by offering less cash than the 600 billion yuan ($89 billion) maturing this month. The median estimate is for a 400 billion yuan injection, and all of those polled expect the rate to be kept unchanged.