PBoC injects A$23 billion into banks
(22 October 2015 – China) The People's Bank of China (PBoC) provided domestic banks with a total of 105.5 billion yuan (A$23 billion) earlier this week amid a slowing economy, with gross domestic product growth having just slipped under seven percent for the first time in over six years.
For the second time in three months, the central bank used a Medium-erm Lending Facility, which was introduced in September last year, to provide liquidity to undisclosed banks on an irregular basis it said in a statement.
The mechanism differs from scheduled open-market operations carried out every Tuesday and Thursday. It was last used in August, when the bank provided a total of 110 billion yuan.
Interest rates have decreased five times since November and China has eased lenders’ reserve requirements to assist in minimising financing barrier as the countries growth slows.
Chen Ji, a Shanghai-based senior researcher at Bank of Communications Co. told Bloomberg: “The PBoC aims to ensure liquidity is ample and push financing costs lower in the medium- to long-term,”
“China is now more likely to announce targeted measures to spur growth while benchmark interest rate and reserve-requirement ratio cuts are still possible this year.”
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