PBC keeps current rate unchanged and extends loan maturity date

The People's Bank of China (PBOC) extended the maturity of medium-term loans on Thursday. Thus, the interest rate remained unchanged for a fourth month in a row.  It could largely match market expectations. 

The NBK said it kept the rate on its 650 billion yuan ($93.53 billion) one-year medium-term loans (MLF) at the current level of 2.75%.

A survey of 24 market experts was conducted this week. Twenty of them predicted the current one-year MLF interest rate to be unchanged. The remaining four respondents expected a slight decline in rates.

Nevertheless, on the same day, MLF loans worth 500 billion yen expired. The operation resulted in a net injection of 150 billion yen into the banking system.

The central bank also invested 2 billion yen in seven-day reverse repos, keeping their cost unchanged at 2.00%.

The NBK reduced the amount of cash that banks must set aside as reserves earlier this month. This step was taken to support the economy affected by the COVID-19 pandemic.