China’s central bank has published details on its latest tool to provide liquidity as banks from Goldman Sachs Group Inc. to Australia & New Zealand Banking Group Ltd. (ANZ) see a rate cut as unlikely.
The People’s Bank of China confirmed it pumped 769.5 billion yuan ($126 billion) into the country’s lenders in the last two months through a newly-created Medium-term Lending Facility. The PBOC injected 500 billion yuan in September and another 269.5 billion yuan in October via the facility — all termed at three months with an interest rate of 3.5 percent.
The announcement, included in the PBOC’s quarterly monetary policy statement, is the first official confirmation of earlier reports on the injections. The facility is the latest unconventional liquidity tool as the PBOC joins the European Central Bank on a path of easing even as the U.S. begins the shift to a more normal monetary policy.
The operation so far is equivalent to a 75-basis-point cut in the required reserve ratio, according to ANZ. The central bank has left reserve requirements for the largest banks and benchmark interest rates unchanged for more than two years.