China’s central bank kept its key policy rates unchanged Wednesday while adding more liquidity to the market amid rising demand for cash.
The People’s Bank of China injected 1.45 trillion yuan ($199.91 billion) worth of funds via the one-year medium-term lending facility at an interest rate of 2.5%–the same as under the previous operation.
There were CNY850 billion worth of MLF due on Wednesday, according to Wind, a local data provider.
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The PBOC also injected CNY495 billion of liquidity through seven-day reverse repurchase agreements at an interest rate of 1.8%. There was CNY474 billion in reverse repos coming due Wednesday, according to Wind.
Analysts had expected the central bank to add more liquidity to the market by cutting banks’ reserve requirement ratio. The increase in loans issued through the MLF and reverse repo mechanisms is likely to alleviate some demand for funds as Beijing moves to issue more government bonds to shore up a slowing economy.
