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China’s Central bank announced a reduction in the cost of its medium-term loans to banks on Wednesday as part of broader policy easing measures aimed at boosting the economy. The People’s Bank of China (PBOC) lowered the rate on 300 billion yuan worth of one-year medium-term lending facility (MLF) loans to financial institutions to 2.00% from 2.30%. The bid rates for the operation ranged from 1.90% to 2.30%, with a total balance of MLF loans now at 6.878 trillion yuan. The move reflects the Central bank‘s commitment to enhancing the transparency of monetary policy, as differences in funding needs among financial institutions came to light.
In a separate development, the PBOC injected 196.5 billion yuan through 14-day reverse repos on the same day, keeping the interest rate unchanged at 1.85% from the previous operation. This comes as part of efforts to revitalize the economy and counter deflationary pressures. The Central bank‘s actions are being closely monitored by market analysts, who anticipate further measures such as a reserve requirement ratio cut before year-end due to heavy MLF maturities in the fourth quarter. The PBOC’s decision to disclose the highest and lowest bids for the MLF loans signals a shift towards a more demand-driven approach and a reduced reliance on the MLF rate as a policy guidance tool.
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Emma Collins, graduated in Financial Economics from the University of Chicago in the USA in 2016. She has since worked at an asset management firm in New York, where she specializes in investment strategies and portfolio management. Emma has a keen interest in financial analysis and has published several articles in renowned financial journals. Her work focuses on providing actionable insights to investors, and she is known for her forward-thinking approach to managing financial portfolios.
