China’s central bank rolled over maturing medium-term policy loans while keeping the interest rate unchanged on Monday, as expected, but markets expect monetary easing may be inevitable in the coming months to support the economic recovery, reports Nikkei Asia. The People’s Bank of China (PBOC) said it was keeping the rate on RMB 125 billion ($18.08 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 meant to fully meet financial institutions’ needs and to “maintain reasonably ample banking system liquidity,” the PBOC said in an online statement. In a Reuters poll of 30 market watchers conducted last week, 26 participants, or 86.7%, predicted no change to the MLF rate, while four respondents expected a marginal rate cut.
The government lifted stringent pandemic measures in December that have started to rekindle credit demand in the world’s second-largest economy, but there are growing concerns that momentum is slowing after the initial bounce.