China pours $281m liquidity to bolster business activity

The People’s Bank of China (PBC) conducted seven-day reverse repos worth two billion yuan ($281.77 million) at an interest rate of 1.8 per cent, to ensure a smooth flow of credit throughout the financial system, Xinhua reported on Monday.

The bank employed the medium-term lending facility (MLF) to provide more stable source of funding.  Through the MLF, commercial and policy banks can borrow funds from the central bank for a one-year period at a fixed interest rate 2.5 per cent.

By injecting liquidity, the PBC aims to create an environment where banks are comfortable with lending money. This, in turn, fuels economic activity by providing businesses with the capital they need to invest and expand.