Beijing to inject 200b yuan of loans into banks
Move by the central bank aims to keep liquidity ample and support the slowing economy
The mainland is set to inject about 200 billion yuan (HK$252.5 billion) worth of three-month loans into five or six listed banks to keep liquidity ample and support the slowing economy, sources said yesterday.
The injection follows signs that mainland investors are beginning to bet that the People's Bank of China is going to reduce the official deposit rate, now fixed at 3 per cent.
It came after a 500 billion yuan injection the central bank made into the mainland's top banks last month through its standard lending facility in the form of three-month loans.
"Banks got the notice [yesterday] afternoon but perhaps will only receive the funds next week. This injection focuses on listed joint-stock banks," one source said.
Analysts also suspect recent moves to guide traded short-term rates by lowering the guidance rates for repurchase contracts may be buttressed by cuts in nominal lending rates. The aim would be to encourage state-owned banks to lower the cost of credit for productive investments.
Regulators were concerned by signs of slowing loan growth this summer, but yuan loans picked up in September, relieving worries that demand was slackening. However, the Friday standard lending facility shows the central bank is still engaged in targeted easing to keep cash in the system.
