SHANGHAI, March 15 (Reuters) – On Tuesday, China’s central bank renewed maturing medium-term political loans while keeping the interest rate unchanged, defying market expectations of an imminent easing of monetary policy to support the slowing economy.
The People’s Bank of China (PBOC) said it was holding the rate on 200 billion yuan ($31.44 billion) of one-year medium-term loans (MLFs) CNMLF1YRRP=PBOC to certain financial institutions unchanged at 2.85% compared to the previous operation.
But, as 100 billion yuan of MLF loans came due on Tuesday, the operation resulted in a net injection of 100 billion yuan of fresh funds into the banking system.
Twenty-nine of 49 traders and analysts, or 59% of all participants polled by Reuters, predicted a cut in the one-year MLF rate.
The central bank also injected 10 billion yuan through seven-day reverse repos. CN7DRRP=PBOC to offset the same amount of those loans due on the same day, while keeping borrowing costs unchanged at 2.1%, according to an online statement.
($1 = 6.3607 Chinese yuan renminbi)
(Reporting by Winni Zhou and Andrew Galbraith; Editing by Kim Coghill)
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