Central Banks

Xi’s Cryptic Bond Comments Hint at PBOC Becoming More Like Fed

President’s speech initially sparked QE debate among traders
A new tool could help central bank regulate market liquidity

WATCH: China’s better-than-expected factory data in March is boosting optimism about its ability to reach its growth target this year. However, Bloomberg Economics says that while overall sentiment has improved, there are no signs of a broad-based recovery taking hold. Chief Asia Economist Chang Shu speaks on “Bloomberg: The China Show”.Source: Bloomberg.

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By Bloomberg News

April 1, 2024 at 10:00 PM UTC

This article is for subscribers only.

A resurfaced speech from Chinese President Xi Jinping suggests policymakers may start trading government bonds to regulate liquidity in the market, pushing the nation toward strategies used by the Federal Reserve and other major central banks around the world.

Xi’s call for the People’s Bank of China to “gradually increase the buying and selling of government bonds” in its open market operations sparked a frenzy of speculation among traders last week. The remarks — made in October but publicized recently in a new book and newspaper article — may hint at a policy pivot for a central bank that hasn’t made a significant bond purchase since 2007.