The Central bank issued 60 billion yuan of one-year bonds yesterday, and the yield dropped by 20.47 basis points, raising expectations that an interest rate cut is on the way, reports Beijing Business Today.
Previous rate cuts have been emergency measures taken in response to financial turbulence, said Xia Minren, an analyst from China International Trust & Investment Corporation (CITIC). Whether the interest rate will be lowered or not will not become clear until the end of October when the 2008 third quarter data are released.
On the same day, the central bank drained 60 billion yuan via 28-day repurchase agreement with a yield of only 3 percent, down 20 basis points in four weeks. Xia said that the expectation of an interest rate cut was the main reason, but another might be that that the central bank is selling fewer bonds than the market demands.
For more details, please read the complete story in Chinese:
(http://www.bbtnews.com.cn/finance/channel/political57166.shtml)
(China.org.cn by Fan Junmei, October 15, 2008)
