The People’s Bank of China (PBOC), in an effort to support its struggling economy, has continued its strategy of injecting cash into the markets for the tenth consecutive month. The central bank’s commitment to economic stability was underscored on Friday when it funneled 591 billion yuan ($81.2 billion) into the markets through a medium-term lending facility (MLF). This action resulted in a net injection of 191 billion yuan.
The MLF, a key policy tool used by the PBOC to manage liquidity in the economy, has been instrumental in these cash infusions. The most recent cash injection follows another measure taken by the central bank just a day prior. In an attempt to stimulate economic activity, the PBOC announced a cut to lenders’ reserve requirements, freeing up more funds for lending.
Despite these proactive measures, the PBOC has held steady on maintaining the interest rate on the MLF loan at 2.5%. This decision comes after an unexpected 15-basis-point reduction last month. The central bank’s actions reflect its ongoing efforts to balance between ensuring liquidity and managing borrowing costs in an economy under pressure.
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