MNI POLICY: PBOC May Lower Rates in Feb Boosting Economy

By Archie Zhang

     BEIJING (MNI) - The People's Bank of China is expected to lower the rate

for Medium-term Lending Facility (MLF) in February and effectively guide the

Loan Prime Rate (LPR) lower, according to a member of a PBOC committee.

     Ma Jun, a member of the Monetary Policy Committee under the central bank,

told state-media Financial News that current liquidity in the banking system is

"very ample" as it is CNY900 billion higher than the last post-Chinese New Year

period, and beyond the market's expectation.

     The PBOC injected a net of CNY150 billion through open market operations on

Monday while lowering the money market rates by 10 bps to counter the economic

impact of the Coronavirus epidemic.

     In the same interview posted on PBOC's official social media account, Ma

said the lowered money market rates have the effect of cutting interest rates

anticipated by some market participants, stabilizing the expectations of

investors and boosting confidence in the finance market.

     The rate cut can push down interest rates in the wider market, reducing the

cost of capital, alleviating the financial pressure of companies, supporting the

real economy and mitigating the impact of the epidemics on medium and small

companies, Ma said.

     Today's liquidity injection, together with the impact of lowering the

Required Reserve Ratio in January, will probably nudge down the LPR on 20th

February, according to Ma. The LPR is a market-oriented basis all banks use to

price loans. 

--MNI Beijing Bureau; +86 (10) 8532-5998; email: archie.zhang@marketnews.com

--MNI Beijing Bureau; +86 10 8532 5998; email: william.bi@mni-news.com

--MNI Sydney Bureau; +61 405322399; email: lachlan.colquhoun.ext@marketnews.com

[TOPICS: MMQPB$,M$A$$$,M$Q$$$]