China’s central bank has avoided cutting interest rates and channeling liquidity into the economy, disappointing analysts who expected more dynamic action to protect growth from a worsening pandemic.
The focus is now shifting to a possible reduction in the reserve requirement for banks, a move that would give lenders cheap financing to stimulate lending and growth in the economy.
The central bank kept the one-year lending rate at 2.85%, while only 6 of the 22 analysts had predicted the decision, as most expected a fall of 5-10 basis points.
The central bank also refrained from injecting additional liquidity into the financial system, opting instead to pass on $ 150 billion ($ 23.5 billion) in outstanding loans to the medium-term lending facility.
Economists expected a net inflow of 100 billion yuan.
Forecasts for growth in China are steadily declining this year, and top officials have repeatedly warned of a worsening outlook as lockdowns rise.
Economists now expect growth to slow to 5% in 2022, below the government target of around 5.5%.
Source: Capital
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