SHANGHAI/SINGAPORE- China’s central bank is expected to ramp up liquidity injections and cut a key interest rate when it rolls over maturing medium-term policy loans today, as authorities try to get the shaky economy back on more solid footing.
Expectations of monetary easing have heightened after major Chinese commercial banks lowered deposit rates late last year, paving the way for further reductions in policy rates at a time when persistent deflationary pressures also warrant additional stimulus.
A protracted property crisis, cautious consumers and geopolitical challenges are also pointing to another bumpy year for the world’s second-biggest economy.
In a Reuters poll of 35 market participants conducted this week, 19 or 54.3 percent expected the People’s Bank of China (PBOC) to cut the borrowing cost of one-year medium-term lending facility (MLF) loans
The central bank last cut the MLF rate in August 2023 by 15 basis points (bps).
Thirty, or 85.7 percent of all respondents, predicted the central bank would inject fresh funds into the financial system exceeding the maturing 779 billion yuan ($108.73 billion) of MLF loans due this month.
