China’s central bank leaves interest rate unchanged

China’s central bank left key policy rates unchanged on Wednesday after lowering benchmark policy rates in May to support a slowing economy.

The People’s Bank of China kept the interest rate on the one-year medium-term loan facility unchanged at 2.85% while injecting 200 billion yuan ($29.67 billion) of liquidity into the system banking through the MLF, according to a statement posted on its website.

It also kept the interest rate for seven-day reverse repurchase agreements at 2.1 percent while injecting 10 billion yuan of liquidity through the monetary tool, according to the statement.

Last month, the central bank cut the benchmark five-year loan prime rate to 4.45% from 4.6% in a bid to reduce funding costs for struggling businesses.

Prior to the benchmark decline, the PBOC kept its MLF rates unchanged. Economists are closely watching developments in the central bank’s MLF interest rates, which are used to price LPR, to forecast any changes in benchmark interest rates.

China’s leading economic indicators improved in May, official data showed Wednesday, after Beijing eased its Covid-19 policy.

The PBOC’s next decision on the LPR is expected on Monday.

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