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PBOC gauges banks’ demand for loans at lower costs

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Beijing / Bloomberg

The People’s Bank of China (PBOC) gauged demand for medium-term loans on Wednesday at an interest rate lower than it’s offered in the past, Reuters reported, citing people it didn’t identify.
The monetary authority lowered the cost of the three- and six-month, and one-year Medium-term Lending Facility by 25 basis points to 2.5 percent, 2.6 percent and 2.75 percent, respectively.
The central bank has steadily reduced rates for MLF operations this year while keeping the benchmark interest rate unchanged since October.
In managing short-term liquidity, the PBOC drained almost a record amount from the system over the last four weeks.
The yield on government notes due in January 2026 fell four basis points to 2.81 percent as of 5:24 pm in Shanghai, according to National Interbank Funding Center prices. That’s the lowest level for a benchmark security since January 22, ChinaBond data show.
The cost of one-year interest-rate swaps, the fixed payment to receive the floating seven-day repurchase rate, dropped three basis points to 2.27 percent, the lowest since February 18, data compiled by the Bloomberg show.
The seven-day repo rate, the benchmark gauge of the interbank funding availability, was little changed at around only 2.29 percent, data from the National Interbank Funding Center show.
PBOC is the central bank of the People’s Republic of China with the power to control monetary policy and regulate financial institutions in mainland China.
The People’s Bank of China has more financial assets than any single public institution, and is second only to the Federal Reserve System of the United States in terms of overall central bank assets.
The top management of the PBOC is composed of the governor and a certain number of deputy governors. The governor of the PBOC is appointed into or removed by the National People’s Congress or its Standing Committee.
The candidate for the governor of the PBOC is nominated by the Premier of the People’s Republic of China and approved by the National People’s Congress.
When the National People’s Congress is in adjournment, the Standing Committee sanctions the candidacy for the governor of the PBOC.
The deputy governors of the PBOC are appointed to or removed from office on the orders of the Premier of the State Council.

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