China pumps 17bn yuan into economy to ease credit fears

CPD logo

China’s central bank has pumped funds into money markets for the first time in almost six months in a bid to ease fears over a repeat of last month’s cash crunch.

The People’s Bank of China injected 17bn yuan (£1.7bn) into the money markets, marking the first time it has taken such action since February.

In mid-June, China endured a small credit crisis when the Shanghai Interbank Offered Rate began to rise as a result of steep levels of interbank borrowing demands.

Previously the central bank has acted to ease the pressure but on this occasion it sat tight, driving the Shanghai Interbank Offered Rate rate skywards and causing a market panic. The decision by the bank not to intervene was taken to force lenders to ease rapid credit growth.