China's Central Bank Keeps Key Policy Rates Steady

China's central bank kept its key policy rates unchanged on Friday while reporting a net withdrawal of liquidity from the financial market.

The People's Bank of China held its one-year medium-term lending facility steady at 2.5% while injecting 387 billion yuan ($53.80 billion) worth of liquidity through the monetary tool, according to a statement on its website. There was a total of CNY481 billion of MLF loans due Friday, indicating a net withdrawal of liquidity.

The PBOC also injected CNY13 billion of liquidity via its seven-day reverse repurchase program at an interest rate of 1.8%, the same as the previous operation.

The move to hold the rates signals that China's benchmark lending rates may be kept steady this month, after a cut in the five-year loan prime rate last month despite a hold in the MLF rate.

Commercial banks in China are asked to price their LPR with MLF rates.

However, the net liquidity withdrawal from the MLF may suggest an imminent cut in banks' reserve requirement ratio, which could unleash a bigger amount of funds into the financial system. PBOC Gov. Pan Gongsheng had signaled potential cuts to the RRR during the country's annual legislative meeting last week.

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(END) Dow Jones Newswires

March 14, 2024 22:14 ET (02:14 GMT)

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