China continues to skip open market operations

BEIJING - China's central bank continued to skip open market operations Monday as a reserve requirement ratio (RRR) cut injected liquidity into the market.

The People's Bank of China (PBOC) reduced the RRR for RMB deposits by 1 percentage point, effective on Monday.

Some of the liquidity unleashed will be used to pay back around 450 billion yuan of the medium-term lending facility maturing Monday, while the liquidity of another 750 billion yuan would be injected into the market, according to a PBOC statement earlier this month.

With the RRR cut, the overall liquidity in the banking system was "relatively high," enough to offset the impact of required reserve payment and government bond issuance, the PBOC said Monday.

The PBOC will make policies more forward-looking, flexible and effective, maintain proper control over the money supply and keep liquidity at a reasonable and abundant level, according to a quarterly report released in August.