China’s central bank suspended open market operations Tuesday, citing sufficient liquidity in the banking system.
The move meant a net cash withdrawal of 170 billion yuan (25.7 billion U.S. dollars) from the market as previous reverse repos matured Tuesday.
A reverse repo is a process by which the central bank purchases securities from commercial banks through bidding, with an agreement to sell them back in the future.
The central bank has increasingly relied on open market operations for liquidity management, rather than cuts in interest rates or reserve requirement ratios.
China set the tone of its 2017 monetary policy as prudent and neutral, keeping appropriate liquidity levels while avoiding excessive liquidity injections.