CHINA’S central bank is set to inject about 200 billion yuan (US$32.66 billion) worth of three-month loans into five or six listed banks to keep liquidity ample and support the slowing Chinese economy, sources said Friday.

    The injection follows signs that Chinese investors are beginning to bet that the central bank is going to reduce the official deposit rate, now fixed at 3 percent.

    It came after a 500 billion yuan injection the People’s Bank of China made into China’s top banks last month via its standard lending facility in the form of three-month loans.

    “Banks got the notice this afternoon but perhaps will only receive the funds next week. This injection focuses on listed joint stock banks,” one source said.

    The People’s Bank of China has informed the joint stock banks to submit applications for the funds in the form of three-month loans from the central bank, according to banking executives briefed on the matter. Interest rates on the loans are expected to be similar to the low rates on the 500 billion yuan funds given to the five State-owned banks, they said.

    Analysts also suspect that recent moves to guide traded short-term rates by lowering the guidance rates for repo contracts may be buttressed by cuts in nominal lending rates. The aim would be to encourage State-owned banks to cut the cost of credit for productive investments. (SD-Agencies)