China Drains Cash Via Key Funding Tool for First Time Since 2022
- PBOC keeps MLF rate steady at 2.5% ahead of Fed pivot
- Net withdrawal of 94 billion yuan after PBOC hints RRR cut
The People's Bank of China (PBOC) building in Beijing.
Source: Bloomberg
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China drained cash from the banking system with a medium-term liquidity tool for the first time since November 2022, extending its cautious approach of using monetary policy to boost growth and showing its willingness to support the yuan.
The People’s Bank of China withdrew 94 billion yuan ($13 billion) of cash from the banking system on a net basis to avoid excessive liquidity, while it kept the rate on its one-year policy loans steady at 2.5% on Friday. Earlier today, Beijing set its daily reference rate for the yuan, with the largest strong bias to the Bloomberg-survey estimate since November.