SHANGHAI - China’s central bank partially rolled over loans from its one-year liquidity facility on Tuesday but kept the lending rate unchanged, a sign it is willing to maintain adequate credit to support a slowing economy but wary of excessive stimulus.While analysts considered it a measured move, many still expect the People’s Bank of China to step up stimulus this week by guiding benchmark rates for new loans lower on Friday as central banks globally rush to loosen monetary policy.
The PBOC kept the one-year MLF rate unchanged, at 3.3%, reflecting an inclination to avoid loosening monetary policies too much, despite China’s growing economic pressures. While the PBOC kept the MLF rate unchanged, analysts expect the Loan Prime Rate , which was designated the reference rate for new loans last month, to be set lower at the monthly fixing on Friday. The MLF rate, seen as banks’ funding costs via the interbank market, is the reference banks use when setting LPRs, which are benchmarks for new loans. By reducing the MLF rate, PBOC can guide borrowing costs lower in the real economy.
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