"We think the liquidity strain in early February could be associated with fast-paced bank loan issuance, as well as intense local government bond offerings since February," said Mary Xia, China rates strategist at UBS Securities. "Also, banks' negotiable certificate of deposit (NCD) re-financing pressure is significant this month." Xia expects the PBOC to lend a fresh 200 billion yuan on a net basis. "We expect the PBOC to stay supportive of liquidity, including via an outsized MLF rollover at 400 billion yuan," said Frances Cheung, rates strategist at OCBC Bank. New bank loans in China jumped more than expected to a record in January as the central bank looked to kickstart a recovery in the world's second-biggest economy after the lifting of pandemic controls, while inflationary pressure remained under control. "Although headline inflation is expected to rise further, we do not expect sufficient pressure to prevent further government loosening despite the fact that the economy is forecast to see an economic recovery in 2023," said Mike Kerley, portfolio manager at Janus Henderson Investors. "Producer price inflation in January ... suggested there is still a lot of surplus capacity in the economy which will need to be absorbed before inflationary fears become an issue." ($1 = 6.8153 Chinese yuan) (Reporting by Hou Xiangming and Brenda Goh; Writing by Winni Zhou; Editing by Simon Cameron-Moore)
Messaging: winni.zhou.thomsonreuters.com@reuters.net)) SHANGHAI, Feb 14 (Reuters) - China's central bank is
widely expected to inject more liquidity when rolling over
maturing medium-term policy loans on Wednesday, while keeping
the interest rate unchanged, a Reuters survey showed.
Markets have hoped the People's Bank of China (PBOC) would
pump more cash into the banking system after money conditions
became unexpectedly tight at the start of the month and to aid
the economic recovery after Beijing exited from its strict
zero-COVID strategy in December.
In a poll of 31 market watchers conducted this week, 25, or
81% of all participants predicted that the central bank would
inject fresh funds exceeding the maturity by an average of 200
to 300 billion yuan ($44.02 billion).
However, the other six respondents forecast an exact full
rollover of the 300 billion yuan worth of maturing medium-term
lending facility (MLF) loans.
All participants expected the PBOC to keep the interest rate
on the one-year MLF loans unchanged at 2.75%.
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