The People’s Bank of China has decided to keep the one-year benchmark lending rate, which serves as its main policy interest rate, unchanged. Additionally, the PBoC injected $700 billion into the market through the Medium-term Lending Facility (MLF) mechanism, providing medium-term credit to banks. Following the reduction of the 1 and 5-year loan prime rates (LPR) that serve as benchmark rates in China after the rate cut earlier this week, the People’s Bank of China (PBoC) has maintained the one-year benchmark lending rate, which is considered its main policy interest rate. Today, the PBoC reported that it has injected $700 billion (equivalent to $98.2 billion) into the market through the mechanism known as the “Medium-term Lending Facility” (MLF). The Central Bank is offering loans with a one-year term at a 2% interest rate while keeping the benchmark lending rate unchanged. As of today, the total MLF funds maturing amount to 789 billion yuan ($110.7 billion), resulting in a net withdrawal of 89 billion yuan ($12.5 billion) from the market. Additionally, the Central Bank injected 292.6 billion yuan ($41.07 billion) into the market through 7-day reverse repurchase agreements at an interest rate of 1.5%. The Bank has also kept the interest rate steady in reverse repurchase agreements. The MLF mechanism allows Chinese banks to obtain medium-term credit from the central bank by using securities as collateral. In reverse repurchase agreements, the central bank purchases securities to provide cash to the market with the agreement to sell them back at a later date. The BENCHMARK INTEREST RATES HAD BEEN REDUCED: Earlier this week in China, a 25 basis point reduction was announced in the 1 and 5-year loan prime rates (LPR), which serve as benchmark rates for corporate and real estate loans. According to the National Interbank Funding Center, the 1-year loan prime rate was lowered from 3.35% to 3.1%, and the 5-year loan prime rate was reduced from 3.85% to 3.6%. The interest rate cut was part of a series of policy measures taken by the PBoC to stimulate the economy, including reductions in the reverse repo rate, reserve requirement ratios, mortgage rates, and minimum down payments since the end of September. Analysts interpreted the decision of the central bank to maintain the policy rate as a sign of a cautious approach to monetary policy despite the gradual stimulus steps.