THE central bank lent 156 billion yuan (US$24.63 billion) to financial institutions yesterday via its one-year medium-term lending facility (MLF) with rates unchanged and 80.1 billion yuan through pledged supplementary lending (PSL), it said in a statement.

The cash injection through MLF came as the first such operation after the People’s Bank of China cut the reserve requirement ratio (RRR) at commercial banks in April to repay their respective outstanding MLFs.

The new MLF injection effectively rolled over the same amount of such loans maturing yesterday. A batch of MLF worth 156 billion yuan was set to expire on the same day.

The interest rate for the one-year MLF was unchanged at 3.30 percent, according to the statement.

The central bank said in the same statement that it skipped reverse repos yesterday.

First introduced in 2014 to help commercial and policy banks maintain liquidity, the MLF tool allows lenders to borrow from the central bank by using securities as collateral.

The central bank increasingly relies on open-market operations, rather than changes in interest rates or reserve requirement ratios, to manage liquidity in a more flexible and targeted manner.

Another targeted RRR cut is possible in July, Hua Changchun, a top researcher of Guotai Junan Securities, said yesterday.

China has decided to maintain a prudent and neutral monetary policy in 2018 as it strives to balance growth and risk prevention.

The central bank will strike a balance between stabilizing economic growth, pushing structural changes and preventing risks, it said.

The central bank also reaffirmed that it will keep the yuan basically stable while increasing the currency’s two-way fluctuations and deepening market-based currency reforms.

(SD-Agencies)