The People’s Bank of China invested large amounts of money in the market while keeping interest rates stable.

While the People’s Bank of China (PBoC) kept the one-year interest rate (policy rate) constant, it provided a large amount of cash to the market through the Medium-Term Loan Facility (MLF) and reverse repo transactions. .

In the statement made by the People’s Bank of China, it was reported that 1 trillion 450 billion yuan were transferred to banks with a maturity of one year at 2.5 percent interest through the MLF, and 495 billion yuan were transferred to banks with a maturity of 7 days at 1.8 percent. interest through reverse repo operations.

The statement highlighted that the transactions aim to “maintain liquidity in the banking system at an adequate level”, “balance the impact of short-term factors such as tax payments and the issuance schedule of government bonds” and ” maintain the supply of the base currency at an adequate amount in the medium and long term.”

AGAINST THE PRESSURE CREATED BY THE REAL ESTATE DECLINE

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

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

The bank’s move is seen as a sign that the government will turn to monetary policies that foster economic recovery in the face of pressure created by the slump in the real estate sector and local government debt problems. (AA)