China caught traders off-guard with a surprise injection into the financial system via loans to banks, ahead of data this week which is expected to show a further slowdown in the domestic economy, reported Bloomberg.
The People’s Bank of China (PBOC) added CNY 200 billion ($28 billion) of one-year cash through the medium-term lending facility and it kept the interest rate steady. The move took traders by surprise as the authorities usually inject liquidity when previously offered loans come due and the next batch will not mature until 5 November 2019.
China is scheduled to release gross domestic product data for the third quarter this week. It’s expected to have grown at 6.1 per cent from a year ago, which would be the slowest pace since at least 1992.
More than CNY 400 billion of MLF will come due early next month, providing a window for the PBOC to lower interest rates and inject more liquidity into the financial system.