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Chinese central bank fully renews medium-term loans, interest rate unchanged

The People’s Bank of China (PBOC) said it kept the rate on one-year loans under the medium-term lending facility (MLF) worth 500 billion yuan ($69.55 billion) unchanged at 2.75 percent of dollars provided to certain financial institutions in relation to the previous operation.

As the same amount of these loans matured on Monday, the operation did not result in any injection or withdrawal of medium-term liquidity on a net basis from the banking system.

Previously, the PBOC drained a net amount of 200 billion yuan each in August and September.

In a poll last week of 27 market watchers, not all respondents foresee any change in the FML rate, with the vast majority expecting a partial rollover.

The central bank also injected 2 billion yuan through seven-day reverse repos, while borrowing costs were kept unchanged at 2.00 percent, it said in an online statement.

The PBOC surprised markets in August by cutting both interest rates by 10 basis points to revive demand for credit and support an economy hit by the shock of COVID-19.

($1 = 7.1895 Chinese Yuan)



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