CHINA'S monetary policy just got even harder to follow. For years, the nation's central bank had set commercial banks' deposit rates, along with a floor for lending rates - creating a subsidised system that channelled savers' cash into state-guided borrowing. That's now gone, with a Friday announcement abolishing the deposit ceiling, two years after the People's Bank of China ended the lending-rate lower limit.
The moves are part of a broader shift from a tightly regulated system where the PBOC conceived policy with quantitative outcomes in mind - such as the amount of new loans extended each month - to one where liquidity is determined by the price of capital.
The problem for China watchers is...
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