The slightly higher fund injection would help replenish
liquidity gaps created by upcoming tax payments by banks and
companies, as policymakers look to inject momentum to the
economic recovery.
The People's Bank of China (PBOC) said it was keeping the
rate on 170 billion yuan ($24.75 billion) worth of one-year
medium-term lending facility (MLF) loans to
some financial institutions unchanged at 2.75% from the previous
operation.
Monday's operation was aimed at keeping "banking system
liquidity reasonably ample," the central bank said in an online
statement.
In a Reuters poll of 29 market watchers conducted last week,
all participants expected no change to the MLF rate, while 23
forecast fund offerings would exceed maturity.
With 150 billion yuan worth of MLF loans set to expire this
month, the operation resulted in a net 20 billion yuan of fresh
fund injection into the banking system.
Higher cash offerings could help banks tide over the
quarterly tax payment period in mid April, with some brokerages
estimating as much as 1.7 trillion yuan could be withdrawn from
the banking system.
Some market analysts and traders said stronger-than-expected
economic data including exports, credit growth and narrowing
contraction in property investments suggested that the recovery
from the COVID-19 slump is on track and lowered the chances for
an interest rate cut.
"The PBOC probably won't feel the need to add to broad-based
easing, particularly given that credit demand is already
recovering," economists at Capital Economics said in a note.
"It cut the reserve requirement ratio (RRR) in March, but
our read was that that move was about offering relief to banks,
whose profit margins have been under pressure."
China is due to report its first-quarter gross domestic
product (GDP) and activity indicators on Tuesday.
The PBOC cut banks' reserve requirement ratio (RRR) for the
first time this year in March. It pledged to maintain ample
liquidity, stabilise growth and jobs and focus on expanding
domestic demand in its latest quarterly meeting of its monetary
policy committee.
The PBOC also injected 20 billion yuan through seven-day
reverse repos while keeping the borrowing cost
unchanged at 2.00%, it said in an online statement.
($1 = 6.8690 Chinese yuan)
(Reporting by Winni Zhou and Tom Westbrook; Editing by
Christopher Cushing and Shri Navaratnam)
(Adds details and comments)
SHANGHAI/SINGAPORE, April 17 (Reuters) - China's central
bank bolstered liquidity support for the economy as it rolled
over maturing medium-term policy loans with higher cash
offerings for the fifth month on Monday, while keeping the
interest rate unchanged as expected.
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