Bottom line:
On Friday, PBOC increased interest rates on OMOs (open market operations) by10bp and on SLF (standing lending facility) by 10-35bp—shortly following the rise ininterest rates on MLF (medium-term lending facility) less than two weeks ago. Aswe noted recently, we believe that the PBOC will retain its tightening bias in thenear term as the underlying financial-leverage and macroeconomic arguments fortightened monetary policy have largely remained.