The Central Bank of China announced its interest rate decision – Last Minute Economic News

In the statement made by the People’s Bank of China (PBoC), it was reported that 100 billion yuan (approximately 13.81 billion dollars) was transferred to banks through MLF with a one-year maturity at 2.5 percent interest.

The bank provided 170 billion yuan (approximately $23.49 billion) in cash to banks on April 17, 2023, through MLF. Since the 1-year maturity of the loans in question expired and less money was transferred with the same interest, there was a net cash outflow of 70 billion yuan (approximately 9.67 billion dollars) from the market.

On the other hand, the bank provided 2 billion yuan (approximately 276 million dollars) of cash to the market through reverse repo transactions with a 7-day maturity at 1.8 percent interest. Since the same amount of reverse repo transaction was carried out on April 8 with the same interest rate, the same amount of cash outflowed from the market.

In its statement, the Central Bank stated that the transactions aim to keep the liquidity in the banking system at a sufficient and reasonable level.

MLF allows Chinese banks to receive medium-term loans from the Central Bank in exchange for their movable assets.

In reverse repo transactions, the Central Bank transfers cash to the market by purchasing movable assets to sell them back at a later date.

It is observed that PBoC maintains its cautious monetary policy against the expectation of growth-enhancing monetary expansion in the markets.