China central bank keeps policy rate unchanged, drains cash from banking system

China's central bank on Monday left a key policy rate unchanged as expected when rolling over maturing medium-term loans and drained some cash from the banking system through the bond instrument.

The People's Bank of China (PBOC) said it was keeping the rate on 100 billion yuan ($13.82 billion) worth of one-year medium-term lending facility (MLF) loans to some financial institutions unchanged at 2.50 per cent from the previous operation.

In a Reuters poll of 31 market watchers, all respondents expected the PBOC to leave the interest rate on MLF rate unchanged. With 170 billion yuan worth of MLF loans set to expire this month, the operation resulted in a net 70 billion yuan of fresh fund withdrawals from the banking system.

The central bank also injected 2 billion yuan through seven-day reverse repos while keeping borrowing cost unchanged at 1.80 per cent, it said in an online statement.