(Yicai) April 15 -- The People’s Bank of China reduced the size of its medium-term lending facility by CNY70 billion (USD9.7 billion) today, following a CNY94 billion reduction last month, to siphon more liquidity out of the banking system.

The central bank released CNY100 billion (USD13.8 billion) of fresh funds into the financial system through one-year MLF operations, and kept the rate at 2.5 percent, according to a statement on the PBOC’s website. It replaces CNY170 billion worth that will expire on April 17.

The PBOC also injected CNY2 billion (USD276.3 million) in seven-day reverse repo into the economy today, half the amount that matured today, and kept the interest rate at 1.8 percent.

Funds are generally ample and the reduction in MLF loans can help to keep the balance of supply and demand in the banking system’s cash flow, said Wen Bin, chief economist at China Minsheng Bank.

The fact that the MLF interest rate remained unchanged is in line with market expectations, said Wang Qing, chief macro analyst at Golden Credit Rating International. The PBOC lowered the reserve requirement ratio and five-year loan prime rate in February, and first-quarter economic data shows that the economy is recovering, so more rate cuts are not urgent, he added.

The loan prime rate, which is tied to the MLF interest rate, is also likely to remain the same, Wang said. However, the PBOC will probably trim the MLF interest rate around the middle of this year, to send a positive signal to boost consumption, investment and social expectations, he added.

Editors: Dou Shicong, Kim Taylor