PBOC keeps policy rate unchanged, drains cash from banking system

China’s central bank on Monday left a key policy rate unchanged as expected when rolling over maturing medium-term loans and drained some cash from the banking system through the bond instrument. The People’s Bank of China (PBOC) said it was keeping the rate on 100 billion yuan ($13.82 billion) worth of one-year medium-term lending facility (MLF) loans to some financial institutions unchanged at 2.50 percent from the previous operation.

In a Reuters poll of 31 market watchers, all respondents expected the PBOC to leave the interest rate on MLF rate unchanged. With 170 billion yuan worth of MLF loans set to expire this month, the operation resulted in a net 70 billion yuan of fresh fund withdrawals from the banking system. The central bank also injected 2 billion yuan through seven-day reverse repos while keeping borrowing cost unchanged at 1.80 percent, it said in an online statement.

Last month, China’s central bank said it has reshuffled its monetary policy committee to include securities regulator head Wu Qing, vice central bank chief Xuan Changneng and two new academic members.

Wu, who was named the head of the China Securities Regulatory Commission (CSRC) last month, replaced his predecessor Yi Huiman on the committee, the central bank said in the statement. The monetary committee, chaired by People’s Bank of China Governor Pan Gongsheng, also added two new academic members - Huang Yiping from Peking University, and Huang Haizhou from Tsinghua University, the central bank said. Huang Yiping, who has a doctorate in economics from Australian National University and has worked at Citi and Barclays, is dean of Peking University’s National School of Development.

Huang Haizhou, a US-trained economist, was once a senior executive at investment bank China International Capital Corporation (CICC) and has taught at the Chinese University of Hong Kong, London School of Economics.