MARKET OUTLOOK - China's Central Bank's New Monetary Policy Tool Likely to Keep Short-Term Interest Rates Limited

According to Samuel Tse from DBS Group Research, the new monetary policy tool announced by the PBOC is likely to keep short-term interest rates limited. The economist stated that this new tool, which injects more liquidity into the system, provides an additional funding channel that will help ease liquidity conditions as the year-end approaches. Tse mentioned that the new tool will alleviate liquidity outflows resulting from both central and local government bond issuances stemming from stimulus measures, and also emphasized that it will help maintain the steepening of the Chinese government bond yield curve.