SHANGHAI- China’s central bank injected billions of yuan through medium-term loans into the financial system on Monday, which many market participants interpreted as an effort to prop up the economy, although the cost of such borrowing was left unchanged.
Widening outbreaks of the Delta variant across the country, torrential rains and flooding, and slowing economic growth momentum suggested by recent data all required more easing measures to cushion the slowdown, analysts say.
The People’s Bank of China (PBOC) kept the rate on a one-year medium-term lending facility (MLF) loan worth 600 billion yuan ($92.64 billion) to some financial institutions steady at 2.95 percent from previous operations.
The central bank said the loan operation was meant to “fully meet financial institutions’ liquidity demand” while keeping the fund conditions “reasonably ample”.
The move “took into account that financial institutions could use part of the funds freed from a reduction to reserve requirement ratio (RRR) in July to pay back MLF loans due this month”, the PBOC added.
