Deleveraging with Chinese characteristics

Short-term lending rates in China have dropped to their lowest since July 2015, as the government stimulates the economy….This appears to have been engineered by the People’s Bank of China, which made a particularly large 502 billion yuan ($73.44 billion) loan to commercial banks through its medium-term lending facility in late July….

…Last week the Politburo, the decision-making body of China’s ruling Communist Party, called for pro-growth fiscal measures as well as “reasonable and adequate” liquidity conditions, interpreted as code for easier credit….

“The monetary setting has now almost entirely reversed the financial crackdown that began in 2017,” said Marko Papic, chief geopolitical strategist at BCA Research, in a note to clients. [Link]

Surprised, surprised.

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