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China’s central bank kept its key policy rates unchanged Tuesday, suggesting that it may maintain benchmark lending rates despite more signs of weakness in the world’s second-largest economy.
The People’s Bank of China injected 850 billion yuan ($120.16 billion) of liquidity via the one-year medium-term lending facility at an interest rate of 2.75%. It also injected CNY172 billion of funds via its seven-day reverse repurchase agreement at an interest rate of 2.0%.
The move to keep key rates on hold may mean China’s benchmark loan prime rate will be left unchanged next week, as the LPR is priced based on MLF interest rates.
The PBOC also said it has injected CNY320 billion of medium- and long-term liquidity so far this month via pledged supplementary lending as well as a tech and renovation relending program.
Some economists had expected a cut in banks’ reserve-requirement ratio given there is CNY1 trillion of MLF loans due this month, according to data provider Wind.
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