According to a Reuters report, an official of the Chinese central bank spoke at a closed-door meeting with local money dealers. The meeting happened as the People's Bank of China (PBOC) wanted to assure investors that short-term monetary operations are stable for this year. Investor doubt rose after a sharp, significant increase in short-term rates happened last week.
Short-term interest rates rose on Monday, the highest since June of this year. In June, PBOC's passivity regarding short-term operations resulted to a short-term rate increase of up to 30%.
The PBOC's explanation to the surge in short-term interest rates last week was due to the tax payments. Market players reportedly underestimated the impact of tax payments on short-term rates. PBOC did not sit down on three open market operations sessions before Tuesday. On Tuesday, however, PBOC injected a small funding amounting to CNY13 billion or USD2.13 billion via open market operations.
The meeting was so exclusive that four anonymous attendees refused to give out the name of the central bank official. The attendes themselves did not want to be named as they were not authorized to speak publicly about the matter.
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