Chinese central bank injects 950 billion yuan in medium-term loans
A man riding an electric bicycle walks past the central bank of China, the People’s Bank of China, October 7, 2014.
Zhang Peng | LightRocket | Getty Images
China’s central bank renewed maturing medium-term loans on Tuesday while keeping the interest rate unchanged for the eighth consecutive month.
The People’s Bank of China (PBOC) said in a statement that it was keeping the rate of 950 billion yuan ($ 145 billion) of one-year medium-term loans (MLF) to financial institutions at 2.95%. compared to previous operations.
The new injection of funds far exceeded two batches of these MLF loans which are due to expire in December, with a total volume of 600 billion yuan.
Markets also do not expect any change for the country’s Prime Benchmark Lending Rate (LPR) when it is set monthly next Monday.
The central bank made two reductions in the cost of borrowing MLF loans this year, with a total size of 30 basis points.
The PBOC said in the statement that the rollover was aimed at maintaining “reasonably abundant liquidity in the banking system”, and the infusion “fully met the demand of financial institutions.”
In the same statement online, the PBOC also said it injected an additional 10 billion yuan through seven-day reverse repurchases, with the rate unchanged.
The MLF, one of the PBOC’s main tools in managing the long-term liquidity of the banking system, serves as a guide for the LPR, which is set monthly based on assessments from 18 banks.