SHANGHAI (Reuters). China’s central banks is expected to renew its medium term loans this week. But, a Reuters poll showed that a second cut to the lending rate would be unlikely.

Nineteen of the 22 financial institutions surveyed stated that they expected the People’s Bank of China to issue 200 Billion Yuan (31.45 Billions) of maturing loans under its medium-term lending facility MLF (medium-term loan facility) on Tuesday. This amount will be equal with Friday’s.

Three of the other three indicated that they anticipate issuance slightly exceeding the amount of maturing loans this week to indicate the PBOC’s easing stance.

Respondents to the survey said that they expected the MLF rate would remain steady.

The PBOC cut unexpectedly the rate for one-year MLF loans to financial institutions in January by 10 basis points, to 2.85%, from 2.95%. There was also a 10-basis-point reduction in the reverse repurchase agreement rate rate, which is currently at 2.75%.

The country made a few more cuts after those cuts. It also reduced rates for its benchmark loans prime rates and standing lending facilities (SLFs) loans.

This rate acts as an indicator for the LPR. The LPR is determined every 20th month.

However, expectations for another cut are limited, particularly following stronger-than-expected lending data for January, which was seen addressing some concerns over the strength and effectiveness of policy stimulus.

“I do not believe that rates will change. Zhou Hao (DE: Asia), senior economist, at Commerzbank, stated that January credit data was not bad. “I think we need to watch another month.”

On Friday, the PBOC declared that liquidity would be maintained reasonably adequate and it would increase financial support for key economic sectors. However, they will not resort to “floodlike” stimuli.

This week also sees the maturation of 200 billion Yuan MLF loans on Friday and a total 300 billion Yuan in reverse repos.

The PBOC drained a net 210 bln yuan of the financial sector on Monday. This was done through its usual open market operations. A 10 billion yuan 7-day reverse repo operation was conducted against 220 billion yuan matured seven- and fourteen-day repurchases. [CN/MMT]

($1 = 6.3587 )