Constituent policy

PBOC renews policy loans to maintain liquidity

China’s central bank on Monday renewed maturing medium-term political loans while keeping the interest rate unchanged for a second month, bolstering expectations that conditions will continue to remain loose to help the pandemic-hit economy. .

The People’s Bank of China (PBOC) kept the rate of 500 billion yuan of one-year medium-term loans to certain financial institutions at 2.75 percent, unchanged from the previous operation.

Monday’s decision was intended to “maintain reasonably adequate liquidity in the banking system” and to “fully meet the demand of financial institutions,” the PBOC said in an online statement.

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.

China’s third-quarter GDP, due on Tuesday, is expected to highlight the growing challenges it faces amid weak domestic demand and slowing global growth, according to a Reuters poll.

But strong August lending data has reduced the urgency of an interest rate cut, analysts and traders said, while a weaker currency limits the PBOC’s leeway to maneuver its monetary policy, with China a major outlier in a global round of policy tightening to tame runaway inflation. (Reuters)