PBOC cash injection signals leverage, asset bubble concerns

Shanghai

CHINA'S central bank injected cash into money markets through 14-day reverse bond repurchase agreements (repos) for the first time since February in a sign that policymakers were worried that rising leverage could stoke bubbles in the bond market.

Analysts said that the switch to longer tenor, higher interest rate injections may signal that the central bank is concerned that too much of short-term borrowing is flowing into the bond market. For most of 2016, the People's Bank of China (PBOC) has effectively targeted the lower interest seven-day rate, with cash injections nearly every day.