(Adds details, comments and background)
SHANGHAI, Feb 15 (Reuters) - China's central bank ramped
up medium-term liquidity injections as it rolled over maturing
policy loans on Wednesday, while it kept the interest rate
unchanged, matching market expectations.
The People's Bank of China (PBOC) said it was keeping the
rate on 499 billion yuan ($73.11 billion) worth of one-year
medium-term lending facility (MLF) loans to
some financial institutions unchanged at 2.75% from the previous
operation.
The fund injections were meant to "maintain banking system
liquidity reasonably ample," the central bank said in an online
statement, noting the injection also fully met financial
institutional demand.
With 300 billion yuan worth of MLF loans set to expire this
month, the operation resulted in a net 199 billion yuan of fresh
fund offerings into the banking system.
The fresh fund injections came after money conditions became
unexpectedly tight at the start of the month, and markets
believe the PBOC is keen to maintain sufficient liquidity to
support the economic recovery after Beijing exited from its
strict zero-COVID strategy in December.
"It is sensible to expect the central bank to stay
accommodative and extend more liquidity to satisfy the expected
stronger loan growth in the coming months," said Tommy Wu,
senior economist at Commerzbank.
In a Reuters poll of 31 participants conducted this
week, all respondents expected the MLF rate to stay unchanged,
with 25 of them predicting fresh fund offerings to exceed the
maturity.
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.
Serena Zhou, senior China economist at Mizuho Securities,
said further policy support was still needed to sustain the
recovery in household consumption.
"Note that January data is usually subject to distortion by
the Lunar New Year holiday, and policymakers probably need more
data to confirm a lack of recovery in consumer sentiment," Zhou
said in a note this week, expecting a potential reduction to
China's benchmark deposit rates.
The MLF rate serves as a guide to the lending benchmark loan
prime rate (LPR) and markets mostly use the medium-term rate as
a precursor to any changes to the lending benchmarks. The
monthly fixing of the LPR is due next Monday.
The central bank also injected another 203 billion yuan
through seven-day reverse repos while keeping
borrowing cost unchanged at 2.00%, according to the statement.
($1 = 6.8255 Chinese yuan)
(Reporting by Winni Zhou and Brenda Goh
Editing by Shri Navaratnam and Jacqueline Wong)
Messaging: winni.zhou.thomsonreuters.com@reuters.net))
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