Published on ShanghaiDaily.com (http://www.shanghaidaily.com/)
http://www.shanghaidaily.com/sp/article/2008/200812/20081225/article_385841.htm
Yield on 3-month bills lower than expected
Created: 2008-12-25 15:55:32
Author:Wang Yanlin
THE People's Bank of China, the country's central bank, issued 50 billion yuan (US$7.3 billion) in three-month bills today at a yield of 1.0053 percent, much lower than market expectations.
It indicated the government will likely keep interest rates low and monetary policy will remain relatively loose at least for the first quarter of next year, analysts said.
The yield on the three-month bills was 0.1209 percentage points lower than the 1.1262-percent yield on the last bills issued two weeks ago.
The market had expected the yield to remain largely unchanged while the actual yield was also much lower than the indicative yield of the 1.0820 percent bid posted yesterday in the secondary market.
"It is a sign that the central bank will stick to a relatively loose monetary policy and may cut interest rates further to support market growth next year," said Li Maoyu, an analyst with Changjiang Securities Co.
The central bank announced its fifth interest rate cut in three months on Monday. The benchmark one-year lending and deposit rate both dropped 0.27 percentage points to 5.31 percent and 2.25 percent respectively.
The central bank also cut the banking reserve requirement ratio by 0.5 percentage points, unlocking up to 300 billion yuan in possible lending by financial institutions.
Li estimated there would be more interest rate cuts by the second half of next year. Li estimated about 54 basis points would be cut, depending on the country's economic situation.
China's gross domestic product grew at the slowest pace in five years at 9 percent in the third quarter and China has set an economic growth target of 8 percent next year.
It indicated the government will likely keep interest rates low and monetary policy will remain relatively loose at least for the first quarter of next year, analysts said.
The yield on the three-month bills was 0.1209 percentage points lower than the 1.1262-percent yield on the last bills issued two weeks ago.
The market had expected the yield to remain largely unchanged while the actual yield was also much lower than the indicative yield of the 1.0820 percent bid posted yesterday in the secondary market.
"It is a sign that the central bank will stick to a relatively loose monetary policy and may cut interest rates further to support market growth next year," said Li Maoyu, an analyst with Changjiang Securities Co.
The central bank announced its fifth interest rate cut in three months on Monday. The benchmark one-year lending and deposit rate both dropped 0.27 percentage points to 5.31 percent and 2.25 percent respectively.
The central bank also cut the banking reserve requirement ratio by 0.5 percentage points, unlocking up to 300 billion yuan in possible lending by financial institutions.
Li estimated there would be more interest rate cuts by the second half of next year. Li estimated about 54 basis points would be cut, depending on the country's economic situation.
China's gross domestic product grew at the slowest pace in five years at 9 percent in the third quarter and China has set an economic growth target of 8 percent next year.
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