China’s central bank held its key policy rates steady on Monday, which may mean the same holding pattern for benchmark lending rates later this month.
The People’s Bank of China injected 500 billion yuan ($69.6 billion) of liquidity via its medium-term lending facility, according to an official statement on its website. The MLF carries an interest rate of 2.75%, unchanged from the last operation, and a tenure of one year.
The central bank also injected CNY2 billion of liquidity via its seven-day reverse repurchase agreements at an interest rate of 2%. The rate was also the same as it was during the last operation.
The holding of policy rates signals that China’s benchmark lending rates, which are priced by the PBOC-controlled MLF rates, will be kept steady this month. The PBOC will release the benchmark loan rates on Thursday.
Unlike Western central banks, the PBOC has been easing its monetary stance this year by cutting rates and releasing liquidity into the financing system to stimulate a slowing Chinese economy. Many economists have said the yuan’s rapid depreciation lately may slow the central bank’s pace of easing, as it may trigger more money outflows and add devaluation pressure on the currency.
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