BEIJING - China's central bank unexpectedly added liquidity to the banking system on Friday to help lenders through the tax season, a move that analysts saw as a sign that larger-scale stimulus is unlikely in the near term.
The People's Bank of China offered 200 billion yuan of one-year loans to banks. It kept the interest rate unchanged at 3.25 per cent, showing restraint in monetary policy after this week's worse-than-expected economic data. Liquidity in the banking system is at a"reasonable, sufficient" level as the operation offsets companies' need for funding to pay tax, the PBOC said in a statement.
The moderate injection indicates the central bank remains committed to restraint in monetary easing, even with the economy slowing further in October on weak investment and demand. Policy makers this week loosened the capital requirements for investing in infrastructure projects, another incremental measure aimed at propping up output.
"It's another operation of marginal easing, as the liquidity unleashed from the reserve ratio cut might not be enough to cover the funding demand during tax payments," said Peiqian Liu, China economist at Natwest Markets in Singapore.