China's central bank is focusing more on money market interest rates in its regular open market operations than the size of the operations, the central bank publication Financial News said in a commentary published on Thursday.
The People's Bank of China (PBOC) has achieved its goal of maintaining the stability of money market interest rates around the Lunar New Year holiday with measured, targeted open market operations, the newspaper said.
Investors should focus on interest rates of central bank open market operations and medium-term facility rates, as well as the operation of market benchmark interest rates over a period of time, the commentary said.
Paying too much attention to the size of the central bank's liquidity operations could lead to a misunderstanding of monetary policy, the paper said.
The PBOC was not immediately available to comment outside of business hours.
The PBOC rolled over maturing medium-term loans earlier on Thursday, but drained 260 billion yuan ($40.21 billion) worth of short-term liquidity on a net basis as a result of maturing reverse repos on the day.
Some short-term money rates hit six-year highs before the long holiday as the PBOC refrained from making heavier liquidity injections, prompting some speculation that a shift to a tighter monetary policy stance may be underway.
The newspaper said the absence of a huge cash injection this year was due to less cash demand for the long holiday after authorities discouraged people from travelling or visiting too many friends and relatives during the break due to the coronavirus.
On Thursday, China's blue-chip index eased after hitting an all-time high, weighed by worries over policy tightening and lofty valuations. ($1 = 6.4661 Chinese yuan)