($29.10 billion) of such debt is maturing. "An outsized MLF rollover of 300 to 400 billion yuan is probably needed as market liquidity demand shall stay high on still heavy negotiable certificate of deposit (NCD) refunding needs and ongoing local government bond (LGB) supply," said Frances Cheung, rates strategist at OCBC Bank. China set the target for economic growth this year at around 5% at the annual session of the National People's Congress (NPC). The target was at the low end of expectations, as policy sources had recently told Reuters a range as high as 6% could be set. It is also below last year's target of around 5.5%. "The policy signals from the PBOC and the NPC point to a reduced likelihood of an MLF rate cut this year," said Tommy Wu, senior China economist at Commerzbank.
"This is because policymakers probably expect a relatively
good start for the economy this year and less policy support is
warranted. This is particularly given the conservative and
modest 'around 5%' target for 2023."
Some investors also noted China's monetary policy should
remain stable after Beijing surprised by keeping its central
bank governor and finance minister in their posts, prioritising
continuity as economic challenges loom at home and abroad.
The MLF rate serves as a guide to the loan prime rate
(LPR)and markets mostly use the medium-term policy rate as a
precursor to any changes to the lending benchmarks. The monthly
fixing of the LPRs is due next Monday.
($1 = 6.8721 Chinese yuan)
(Reporting by Li Hongwei and Brenda Goh; Writing by Winni Zhou;
Editing by Jacqueline Wong)
