China’s central bank partially renews medium-term political loans, rate unchanged

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SHANGHAI, November 15 (Reuters)China’s central bank on Tuesday partially rolled over maturing medium-term political loans while keeping interest rates unchanged for a third straight month, broadly meeting market expectations.

The People’s Bank of China (PBOC) said it was holding the rate on 850 billion yuan ($120.21 billion) of one-year medium-term loans (MLFs) CNMLF1YRRP=PBOC to certain financial institutions at 2.75%, unchanged from the previous operation.

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

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

The central bank said Tuesday’s operation was aimed at countering increased demand for cash from tax payments and maintaining “reasonably sufficient liquidity in the banking system.”

The PBOC has offered 320 billion yuan of medium- and long-term liquidity through additional pledged loans (PSLs) and a lending facility since early November, it added.

“The total amount of medium and long-term liquidity injection exceeded the MLF deadline this month,” the PBOC said in an online statement.

The central bank also injected 172 billion yuan through seven-day reverse repos. CN7DRRP=PBOC while keeping borrowing costs unchanged at 2.00%, against 2 billion yuan of such loans expiring on the same day.

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 = 7.0710 Chinese Yuan)

(Reporting by Winni Zhou and Brenda Goh; Editing by Edmund Klamann & Shri Navaratnam)

(([email protected]; +86 21 2083 0100; Reuters Messaging: [email protected]))

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