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PBOC Pumps In More Liquidity to Shore Up Economic Growth -Breaking

by Mike Robinson

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© Bloomberg. On Monday, December 13, 2021, People’s Liberation Army troops stood in front of People’s Bank of China in Beijing. Economists predict China will start adding fiscal stimulus in early 2022 after the country’s top officials said their key goals for the coming year include counteracting growth pressures and stabilizing the economy.

(Bloomberg) — China’s central bank stepped up support for its slowing economy by pumping in cash via policy loans for a second straight month.

The People’s Bank of China injected a net 100 billion yuan ($15.7 billion) into the banking system with its medium-term lending facility. The MLF rate remained unchanged at 2.85%.

Chinese banks extended record loans in January after the PBOC reduced borrowing costs last month for the first-time since 2020. The latest move could further bolster the economy facing headwinds from repeated Covid outbreaks and a slowdown in the nation’s property sector, especially as manufacturing activity readings and holiday tourism data indicate weak domestic demand.

In January, the PBOC lowered the rate of its one-year policy loan by 10 basis point to 2.85%. It was the first such reduction since April 2020. The PBOC also net-injected 200 billion Yuan worth of MLF to the banking system.

Bloomberg polled 17 economists who thought the central bank would keep its interest rate unchanged for one-year policy loan. Six expected a reduction of 10-basis points and five predicted a decrease by 5-basis points. 

©2022 Bloomberg L.P.

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