(Reuters) China’s central bank has kept the rate steady at 2.95% of the maturing one-year medium-term lending facility of 500 billion yuan or $78.5 billion to keep the economy liquid.
The decision by the People’s Bank of China happens, earlier confirming to free up 1.2 trillion yuan through a reduction in the reserve ratio, with the decision coming into effect on Wednesday.
ANZ strategist Xing Zhaopeng says the larger-than-expected liquidity boost confirms PBOC’s intention to keep the economy liquid next year. He adds that PBOC will be open to making necessary changes, including rate cuts when needed.
Economists have held a consensus view that PBOC may reduce the lending benchmark Loan Prime Rate on Monday as further measures to avert an economic meltdown. Goldman sees the LPR rate reduced by 5 basis points.
The moves by China’s central banks happen when the economy experiences sluggish growth, including retail sales and investments. Crackdowns on the tech sector and measures to curb the spread of the coronavirus have also dampened the outlook.
CSI 300 is down -0.87%, USDCNY is down -0.04.
