China's cenbank boosts liquidity further with MLF policy tool, rate unchanged
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2023-09-15 10:21
SHANGHAI/SINGAPORE China's central bank rolled over maturing medium-term policy loans while keeping the interest rate unchanged on Friday,

SHANGHAI/SINGAPORE China's central bank rolled over maturing medium-term policy loans while keeping the interest rate unchanged on Friday, focusing on boosting liquidity on top of a similar move the previous day.

The People's Bank of China (PBOC) said it was keeping the rate on 591 billion yuan ($81.2 billion) worth of one-year medium-term lending facility (MLF) loans to some financial institutions unchanged at 2.50% from the previous operation.

Friday's decision was intended to keep "banking system liquidity reasonably ample" and quarter-end cash conditions stable, the PBOC said in an online statement.

All 33 market watchers polled by Reuters this week predicted no change to the MLF rate.

On Thursday, the PBOC took a similar step to boost liquidity in the financial system, announcing that it would cut the amount of cash that banks must hold as reserves, after lowering key policy rates last month to aid the economic recovery.

With 400 billion yuan worth of MLF loans set to expire this month, the operation resulted in a net 191 billion yuan of fresh fund injection into the banking system. The central bank also injected 105 billion yuan through seven-day reverse repos while keeping borrowing cost unchanged at 1.90%, it said in an online statement. It lent another 34 billion yuan via 14-day reverse repos at 1.95%, down from 2.15% previously. The rate reduction was a follow-up move to the rate cut to the seven-day tenor last month.

($1 = 7.2770 Chinese yuan)

(Reporting by Winni Zhou and Tom Westbrook; Editing by Tom Hogue and Shri Navaratnam)

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