China's central bank increased liquidity injections when rolling over maturing medium-term policy loans for a fourth month in a row on Wednesday, while keeping the interest rate unchanged, matching market expectations.
The higher fund injection suggested that the authorities are keen to keep the market supplied with sufficient long-term funds, while Beijing's modest economic growth target for this year showed policymakers are comfortable with the current pace of recovery from the Covid-19 slump in activity.
Investors believe that there is a low chance of a massive monetary easing as a broad economic recovery is underway following Beijing's exit from its stringent zero-Covid strategy late last year.
The rate on 481 billion yuan ($70.03 billion) worth of one-year medium-term lending facility loans to some financial institutions will remain at 2.75%, the People's Bank of China said.
A Reuters poll of 28 market watchers conducted this week found that all participants expected the MLF rate to stay unchanged, with 20 predicting that fund offerings would exceed the maturity.
This month, 200 billion yuan worth of MLF loans are set to expire, resulting in a net 281 billion yuan injection of fresh funds into the banking system.
"Keeping banking system liquidity reasonably ample" was the central bank's goal for Wednesday's loan operation, it said in an online statement.
"Easing liquidity pressure" is what Xing Zhaopeng, senior China strategist at ANZ, said the higher cash injection would do.
"The nearly 500 billion yuan of fund offerings indicated that the probability of a reduction to the reserve requirement ratio (RRR) in the near term is not high," Xing said, expecting market rates to climb higher.
"Very slim" chances for further monetary easing suggests that China's modest economic growth target for this year is unlikely to be met.
The National People's Congress of China set the target for economic growth this year at 5%. This target is at the low end of expectations, as policy sources had recently told Reuters that a range as high as 6% could be set. The 5% target is also below last year's target of 5.5%.