China cbank injects fresh short- and medium-term loans but keeps rates unchanged

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FILE PHOTO: Headquarters of the People’s Bank of China (PBOC), the central bank, is pictured in Beijing, China September 28, 2018. REUTERS/Jason Lee

SHANGHAI (Reuters) – China’s central bank extended fresh short- and medium-term loans on Wednesday but kept the borrowing cost unchanged, as it seeks to maintain adequate liquidity in a slowing economy without flooding the banking system.

The People’s Bank of China (PBOC) said on its website the interest rate on one-year MLF loans CNMLF1YRRP=PBOC remained at 3.25%, unchanged from the previous operations. It injected 300 billion yuan ($43.51 billion) via the liquidity tool.

The PBOC also extended 100 billion yuan of 14-day reverse repos with the interest rate unchanged at 2.65%.

There is no maturing MLF loan or reverse repo on Wednesday, and the unexpected fund injection came as cash demand surged ahead of the week-long Lunar New Year holiday, which starts next Friday.

The MLF now acts as a guide for the PBOC’s new lending benchmark Loan Prime Rate (LPR), which will release its monthly fixing next Monday.

Reporting by Winni Zhou and Andrew Galbraith; Editing by Tom Hogue

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