China rolls over medium-term policy loans, interest rate unchanged


SHANGHAI/SINGAPORE: China’s central bank rolled over maturing medium-term policy loans and kept the interest rate unchanged as expected on Monday, however markets expect authorities will need to unleash more stimulus to support slowing economic growth.

The economic recovery has lost momentum after an initial burst in the first quarter, prompting monetary authorities to lower key policy rates last month.

However, some market watchers now expect policymakers to deliver fiscal stimulus, as any further interest rate cuts would widen the yield gap with the United States, putting the yuan under more pressure.

The People’s Bank of China (PBOC) said it was keeping the rate on 103 billion yuan ($14.43bn) worth of one-year medium-term lending facility (MLF) loans to some financial institutions unchanged at 2.65 per cent.

Monday’s market operations would fully meet financial institutions’ cash demands and keep “banking system liquidity reasonable ample,” the central bank said in an online statement.

Reuters

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