China Injects Medium-Term Loans Amid Uncertainty
Uncertainty looms with regards to market response to upcoming issuances of medium-term loans by the People’s Bank of China – a key guide for the nation’s prime rate.
The PBoC will conduct medium-term lending facility (MLF) operations today, according to a «Reuters» report citing two unnamed traders who received notices from the central bank. The move will roll over 403.5 billion yuan ($57.4 billion) worth of MLF loans due for expiry on the same day.
The new batch of loans will be key for onlookers attempting to gauge the state of China’s economic growth outlook which is experiencing a 30-year low.
This because the one-year MLF rate, now at 3.3 percent, acts as a guide for PBoC’s new benchmark loan prime rate (LPR). The reform to link LPRs to MLF intent rates was made in August this year to steer borrowing costs lower.
