China central bank set to cut key rate, boost liquidity Monday to aid economy

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China's central bank is expected to ramp up liquidity injections and cut a key interest rate when it rolls over maturing medium-term policy loans on Monday, as authorities try to get the shaky economy back on more solid footing.

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12 Jan 2024

Expectations of monetary easing have heightened after major Chinese commercial banks lowered deposit rates late last year, paving the way for further reductions in policy rates at a time when persistent deflationary pressures also warrant additional stimulus.

A protracted property crisis, cautious consumers and geopolitical challenges are also pointing to another bumpy year for the world's second-biggest economy.

In a Reuters poll of 35 market participants conducted this week, 19 or 54.3% expected the People's Bank of China (PBOC) to cut the borrowing cost of one-year medium-term lending facility (MLF) loans.

The central bank last cut the MLF rate in August 2023 by 15 basis points (bps).

Thirty, or 85.7% of all respondents, predicted the central bank would inject fresh funds into the financial system exceeding the maturing