(Bloomberg) -- China unleashed more funds into the financial system as policy makers sought to bolster the economy weighed by resurgence in virus-led curbs and slowdown in the nation’s property market.
The People’s Bank of China injected a net 100 billion yuan. It also kept the interest rate unchanged at 2.85% on Tuesday after slashing it in January for the first time in almost two years. Ten of the 17 economists polled by Bloomberg had forecast the PBOC to lower the rate.
The need for additional monetary stimulus gained momentum after data last week showed credit expansion in the country unexpectedly slowed in February and a key indicator of home mortgages declined for the first time in at least 15 years. The resurgence of Covid-19 cases and a lockdown in the southern city of Shenzhen, home to major technology firms and one of the busiest ports in the nation, also threatened to slow the world’s second-largest economy.
The government has already outlined higher spending while setting an ambitious a growth target of 5.5% for the year at the National People’s Congress this month. It’s a goal that political leaders say won’t be easy to meet and would need supportive economic policies.
The PBOC has already resorted to unconventional methods of supporting the economy. It announced a plan to transfer more than 1 trillion yuan ($158 billion) in profits to the government to help finance fiscal spending last week.
China’s economy rebounded from its pandemic slump to grow 8.1% last year, though the momentum has slowed to half that pace in the final quarter, dragged down by a housing market slump and weak consumption. The outlook is also deteriorating amid geopolitical tensions related to Russia’s invasion of Ukraine and a spike in oil prices.
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