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The People’s Bank of China drained liquidity from the financial system, signaling that officials remain cautious about drastically stepping up the scope of stimulus even after a slew of weak economic data.
The People’s Bank of China injected 200 billion yuan ($28.3 billion) through the medium-term lending facility while 265 billion yuan worth matured. The one-year funding was offered at 3.3%, according to a statement, unchanged from before. The central bank also let 80 billion yuan worth of 7-day reverse repurchase agreements mature, taking the total net withdrawal to 145 billion yuan.
Tuesday’s operation will offset some of the easing effects of the cuts to bank’ reserve ratios announced earlier in September. Even so, top officials are increasingly worried about economic growth, and more government debt sales are in the stimulus pipeline.
A growing number of economists have cut their forecasts for gross domestic product growth in 2020 to below 6%, and the economy continued to slow in August, official data on Monday showed.
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