(Bloomberg) — China caught traders off-guard with a surprise injection into the financial system via loans to banks, ahead of data on Friday which is expected to show a further slowdown in the domestic economy.
The People’s Bank of China added 200 billion yuan ($28 billion) of one-year cash through the medium-term lending facility on Wednesday. It kept the interest rate steady. The move took traders by surprise as the authorities usually inject liquidity when previously offered loans come due, and the next batch won’t mature until Nov. 5.
The Chinese economy has been under pressure amid a prolonged trade dispute with the U.S. and a slowing domestic economy, prompting the central bank to ease monetary policy by lowering corporate borrowing costs and cutting banks’ reserve ratios this year. Data released this week showed that China’s factory deflation deepened and imports and exports fell last month.