China’s central bank injected 300 billion yuan in medium-term loans – a 60 percent year-on-year increase – though interest rates were kept unchanged.
The 300 billion yuan ($42.6 billion) one-year loan injection from its medium-term lending facility (MLF) on Friday also matched a batch of 1-year MLF loans worth 187.5 billion yuan ($26.6 billion) maturing on the same day.
The People’s Bank of China (PBoC) kept 1-year MLF interest rates unchanged at 3.25 percent after making its first cut since 2016 last month through a 5 basis point reduction.
No Zero Rates
Despite recent loosening, PBoC governor Yi Gang signaled the central bank’s desire to avoid «competitively lowering interest rates to zero or engaging in quantitative easing» in a commentary that foresees prolonged global economic slowdown. Yi also underlined that assessments of economic development should be based also on price and inflation stability rather than purely on growth.
Another batch of MLF loans – which are used to provide medium-term financing to commercial banks – will expire on December 16. Also on the same day, the PBoC skipped reverse repo operations citing sufficient liquidity in the banking system.
