A spike in China’s money-market rate is just temporary and not a sign the People’s Bank of China (PBoC) is tightening policy, Xinhua news agency reported Friday, citing two HSBC Plc (00005.HK) economists. Qu Hongbin, co-head of Asian economic research at the British bank, and Sun Junwei, China economist, were quoted as saying in a research note that there is no need for the central bank to tighten or loosen monetary policy in the coming quarters as inflationary pressures remain modest and additional money inflows can be expected. The seven-day repo rate, a benchmark for short-term funds, climbed to almost a two-month high of 4.67 percent on Thursday, while the PBoC refrained from injecting liquidity by suspending the issuance of reverse repurchase agreements for the third consecutive time, the report said. The central bank might have decided not to issue reverse repos because of the need to slow down money inflows, which have started to accelerate, the economists said. They cited the 126 billion yuan (US$20.54 billion) increase in the forex purchase position of commercial banks in September.
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