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China's policy makers broke their traditional silence on market rumors and denied speculation of easing moves three times this month, attempting to temper expectations the government will implement greater stimulus measures.
The People's Bank of China said late Tuesday that a media report on potential adjustments to the amount of reserves banks are required to hold was "untrue." Earlier this month, it said it sought a police probe into market chatter of reserve-ratio reductions.
The National Development and Reform Commission, the nation's economic planning body, also downplayed a widely circulated draft of consumption stimulus last week, telling China Central Television it'll need "repeated research" before issuing any policies.
The active communication is unusual in Beijing, where officials are often reluctant to respond to media reports, in part out of concern a response could stoke more speculation. The recent approach may signal authorities want to keep market expectations in line with their stated approach of calibrated easing.
"Three times in a month and at senior levels -- it's the first time I've heard" such a response, said Peiqian Liu, Asia strategist at Natwest Markets PLC in Singapore. "Recent meetings by the top leadership have all emphasized a balanced monetary policy -- not too loose or too tight. They don't want markets to have too big a gap in expectations on upcoming policy."
Liu said the central bank may keep using loans via the Medium-term Lending Facility to roll over maturing debt in the open market if economic indicators stay robust, but there is still the possibility of reserve-ratio cuts when growth cools again.
The PBOC offered 267.4 billion yuan ($39.8 billion) of targeted MLF loans on Wednesday, a step that reinforces the shift away from broad easing.
To contact Bloomberg News staff for this story: Yinan Zhao in Beijing at yzhao300@bloomberg.net
To contact the editors responsible for this story: Jeffrey Black at jblack25@bloomberg.net, Sharon Chen, Kevin Hamlin
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