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SHANGHAI, Feb 15 (Reuters) - China's central bank ramped up medium-term liquidity injections as it rolled over maturing policy loans on Wednesday, while it kept the interest rate unchanged, matching market expectations.
The People's Bank of China (PBOC) said it was keeping the rate on 499 billion yuan ($73.11 billion) worth of one-year medium-term lending facility (MLF) loans to some financial institutions unchanged at 2.75% from the previous operation.
The fund injections were meant to "maintain banking system liquidity reasonably ample," the central bank said in an online statement, noting the injection also fully met financial institutional demand.
With 300 billion yuan worth of MLF loans set to expire this month, the operation resulted in a net 199 billion yuan of fresh fund offerings into the banking system.
The fresh fund injections came after money conditions became unexpectedly tight at the start of the month, and markets believe the PBOC is keen to maintain sufficient liquidity to support the economic recovery after Beijing exited from its strict zero-COVID strategy in December.
"It is sensible to expect the central bank to stay accommodative and extend more liquidity to satisfy the expected stronger loan growth in the coming months," said Tommy Wu, senior economist at Commerzbank.
In a Reuters poll of 31 participants conducted this week, all respondents expected the MLF rate to stay unchanged, with 25 of them predicting fresh fund offerings to exceed the maturity.
New bank loans in China jumped more than expected to a record in January as the central bank looked to kickstart a recovery in the world's second-biggest economy after the lifting of pandemic controls, while inflationary pressure remained under control.
Serena Zhou, senior China economist at Mizuho Securities, said further policy support was still needed to sustain the recovery in household consumption.
"Note that January data is usually subject to distortion by the Lunar New Year holiday, and policymakers probably need more data to confirm a lack of recovery in consumer sentiment," Zhou said in a note this week, expecting a potential reduction to China's benchmark deposit rates.
The MLF rate serves as a guide to the lending benchmark loan prime rate (LPR) and markets mostly use the medium-term rate as a precursor to any changes to the lending benchmarks. The monthly fixing of the LPR is due next Monday.
The central bank also injected another 203 billion yuan through seven-day reverse repos while keeping borrowing cost unchanged at 2.00%, according to the statement. ($1 = 6.8255 Chinese yuan) (Reporting by Winni Zhou and Brenda Goh Editing by Shri Navaratnam and Jacqueline Wong)