CHINA’S central bank left its key policy interest rates unchanged yesterday after lowering benchmark lending rates in May to support the cooling economy.

The People’s Bank of China kept the interest rate on its one-year medium-term lending facility unchanged at 2.85% while injecting 200 billion yuan (US$29.67 billion) of liquidity into the banking system via the medium-term lending facility.

It also maintained the interest rate of seven-day reverse repurchase agreements at 2.1% while injecting 10 billion yuan in liquidity via the monetary tool, according to the statement.

The decision came hours before U.S. officials may consider a hike of as much as 75 basis points, the biggest interest-rate increase since 1994. Policy divergence from the United States has wiped out China’s yield premium over U.S. Treasuries.

China has refrained from aggressive monetary easing measures in recent months as interbank liquidity was ample amid sluggish corporate and consumer demand for credit. Policy makers have instead opted for more targeted lending tools and faster fiscal spending to bolster the economy.

China’s central bank last month cut the benchmark five-year loan prime rate to 4.45% from 4.6% in a bid to lower financing costs for businesses.           (SD-Agencies)