China’s central bank has extended fresh short- and medium-term loans today, Wednesday but kept the borrowing cost unchanged, as it seeks to maintain adequate liquidity in a slowing economy and ease a potential crunch ahead of the Lunar New Year with holidays kicking off next week Friday.
That is according to the People’s Bank of China on its website stating that the interest rate on one-year MLF loans remained at 3.25%, unchanged from the previous operations. It injected 300 billion yuan an equivalent of $43.51 billion via the liquidity tool.
Separately, the apex bank also extended 100 billion yuan of 14-day reverse repos with the interest rate unchanged at 2.65%.
There is no maturing MLF loan or reverse repo today Wednesday.
Rising cash demand from companies and households for the Lunar New Year holiday, a flood of special bond issuance by local governments and corporate quarterly tax payments have all combined to drain funds from the banking system.