China Cbank fully renews medium-term contract loans, rate unchanged

SHANGHAI (Reuters) – China’s central bank rolled over maturing medium-term borrowings on Monday while keeping the interest rate unchanged for a second month, in line with market expectations.

The People’s Bank of China (PBOC) said it was keeping the rate of 500 billion yuan ($69.55 billion) one-year medium-term loans (MLF) to certain financial institutions unchanged at 2.75 % compared to the previous operation.

With the same amount of these loans maturing on Monday, the operation resulted in no injection or withdrawal of medium-term liquidity on a net basis from the banking system.

Previously, the PBOC drained 200 billion yuan net each in August and September.

In a poll last week of 27 market watchers, not all respondents expected any change in the MLF rate, with the vast majority expecting a partial rollover.

The central bank also injected 2 billion yuan through seven-day reverse repos while keeping the cost of borrowing unchanged at 2.00 percent, it said in an online statement.

The PBOC surprised markets in August by cutting both rates by 10 basis points to revive credit demand and support an economy hit by COVID-19 shocks.

($1 = 7.1895 Chinese Yuan)

(Reporting by Winni Zhou and Brenda Goh; Editing by Kim Coghill)

Copyright 2022 Thomson Reuters.

James V. Hayes