(Yicai Global) April 24 -- The People's Bank of China unexpectedly extended a second batch of targeted medium-term loans worth CNY267.4 billion (USD39.8 billion) to lenders today. But the impact on liquidity will be less than expected, according to industry insiders.

The one-year loans have an interest rate of 3.15 percent, 15 points lower than the central bank's medium-term lending facility, but equal to the targeted medium-term lending facility's rate when it was debuted in January.

The PBOC turned again to the TMLF, which is designed to channel funds through banks to small, micro and private enterprises, after refuting a rumor it planned to carry out a targeted cut in the reserve requirement ratio tomorrow.

The first targeted medium-term loans injected CNY257.5 billion into the financial system on Jan. 23 based on loan data from the fourth quarter. The market viewed that move as a 'structural interest rate cut.'

"The TMLF is not the same as a traditional interest rate cut and the relaxing effect it brings is likely to be lower than expected," Everbright Securities said in a report issued by its fixed income research team.

First-quarter macroeconomic data was better than expected, but price pressures increased and the capital markets surged, so the PBOC will inevitably keep to a prudent monetary policy, said Zhao Qingming, chief economist at a research institute under the China Financial Futures Exchange. The latest use of the TMLF is fine-tuning, he added.

Editor: Emmi Laine