China’s central bank, the People’s Bank of China, left its policy rate unchanged as the country’s benchmark bond yield growth hit a 5-month high and data revealed a strong start to the year for the world’s second-largest economy, reports Bloomberg.
The 10-year bond yield climbed for the first time in two days after the PBOC surprised markets by keeping the interest rate on its one-year medium-term lending facility unchanged at 2.85%. The central bank had kept the rate steady last month after cutting it for the first time in almost two years in January.
The PBOC’s decision to leave the rate unchanged is a disappointment for the market, said Xing Zhaopeng, senior China strategist at Australia and New Zealand Banking Group. China will maintain a dovish policy stance going forward but “any operation will be targeted and measured,” he said.
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