Pan has been taking greater control of market liquidity and borrowing costs across the yield curve this year. On top of signaling the bank’s preference for a single short-term rate, policymakers have flagged that the PBOC is preparing to cool a bond rally by selling longer-term securities that have soared amid booming demand for haven assets.
China’s central bank said it’s studying a plan to narrow the range within which market interest rates can fluctuate, with policymakers on alert for risks building in the bond market.
The People’s Bank of China is considering how to “reasonably” narrow the rate corridor, according to a quarterly monetary policy report published Friday. In June, Governor Pan Gongsheng said a tighter band would signal a clearer policy target.
