The People’s Bank of China has injected 56.1 billion CNY (7.9 billion USD) into the banking system through the medium-term lending facility (TMLF), just as it is approaching a debt maturity of 267.4 billion CNY. The funding provided is now maturing for one year at an interest rate of 2.95%. For comparison, the last operation in January provided loans at an interest rate of 3.15%.

The bank does not offer short-term financing through open market operations for the 17th consecutive day, a statement said. Yields on 10-year government bonds declined to 2.46%, down from their lowest level since 2002.

The set of measures taken in recent months maintains sufficient liquidity to support China’s weakened economy. Reducing key interest rates on mid-term loans on Friday was part of a broad response from central bankers to support the economy and strengthen investor confidence. The blockade against the spread of the coronavirus is expected to cause the slowest annual economic growth in the country since the 1970s.

The mid-term lending facility created in 2019 is used by the central bank to target liquidity to certain parts of the economy while avoiding an influx of funds in the interbank markets. However, this way of thinking has changed dramatically since the outbreak of the virus, since much broader monetary relief is already required.