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China’s central bank partially rolls over medium-term policy loans, rate unchanged

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SHANGHAI — China’s central bank partially rolled over maturing medium-term policy loans while keeping the interest rates unchanged for a third straight month on Tuesday, largely meeting market expectations.

The People’s Bank of China (PBOC) said it was keeping the rate on 850 billion yuan ($120.21 billion) worth of one-year medium-term lending facility (MLF) loans to some financial institutions at 2.75%, unchanged compared with the previous operation.

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In a poll of 31 market watchers this week, all participants expected the PBOC to keep the interest rate unchanged, while 22 of them anticipated the central bank to fully roll over the maturing loans.

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With 1 trillion yuan worth of MLF loans set to expire on the same day, the operation resulted in a net 150 billion yuan medium-term cash withdrawal through the instrument.

The central bank said Tuesday’s operation was aimed at counteracting higher cash demand due to tax payments and keeping “banking system liquidity reasonably ample.”

The PBOC has offered 320 billion yuan of mid- to long-term liquidity through pledged supplemental lending (PSL) and relending facility since the beginning of November, it added.

“The total amount of mid- to long-term liquidity injection has exceeded the MLF maturity this month,” the PBOC said in an online statement.

The central bank also injected 172 billion yuan through seven-day reverse repos while keeping borrowing costs unchanged at 2.00%, compared with 2 billion yuan worth of such loans expiring on the same day.

The PBOC surprised markets in August by lowering both rates by 10 basis points to revive credit demand and support an economy hurt by COVID-19 shocks. ($1 = 7.0710 Chinese yuan) (Reporting by Winni Zhou and Brenda Goh; Editing by Edmund Klamann & Shri Navaratnam)



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