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China central bank injects $60.2 billion of liquidity in Feb, down sharply from Jan

Reuters

BEIJING (Reuters) - China's central bank injected 413.85 billion yuan ($60.2 billion) via short- and medium-term liquidity tools in February, down 35 percent from the previous month, signaling a bid to rein in rapid credit growth.

That followed a 26 percent drop in January from December.

Under its new "prudent and neutral" policy, the People's Bank of China (PBOC) has adopted a modest tightening bias in a bid to cool explosive growth in debt, though it is treading cautiously to avoid hurting economic growth.

The central bank raised interest rates on its reverse repurchase agreements (repos) and the SLF on Feb. 3, following a rise in rates on the MLF in late January.

The PBOC lent 393.50 bln yuan to financial institutions via its medium-term lending facility (MLF) in February, it said on its website on Wednesday.

Of the total, the central bank lent 150 billion yuan for six months and 243.5 billion yuan for one year.

Outstanding MLF loans totaled 3.761 trillion yuan at the end of February, compared with 3.573 trillion yuan at the end of January, implying a net injection of 188.5 billion yuan.

The central bank also extended 20.35 billion yuan of loans to local financial institutions in February via its standing lending facility (SLF).

Outstanding SLF loans were at 14.92 billion yuan at the end of February, compared with 34.51 billion yuan at the end of January, implying a net drain of 19.59 billion yuan.

The PBOC uses the SLF and the medium-term lending facility as tools for managing liquidity in the banking system.

China's pledged supplementary lending (PSL) facility stood at 2.107 trillion yuan at the end of February, unchanged from the end of January, the central bank said.

China's banks made 2.03 trillion yuan in new local-currency loans in January, the second highest on record, due to a rush among lenders to maintain market share.

New loans hit a record 12.65 trillion yuan of loans in 2016, helping the economy to expand 6.7 percent last year, roughly in the middle of the annual growth target of 6.5-7 percent.

(Reporting by Kevin Yao; Editing by Kim Coghill)

 

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