(Yicai) March 15 -- The People's Bank of China reduced the size of its medium-term lending facility by CNY94 billion (USD13 billion) today, and kept the interest unchanged indicating that the central bank remains confident that there is sufficient liquidity in the banking system.

The central bank released CNY387 billion (USD53.8 billion) worth of fresh funds into the financial system today through one-year MLF operations, and kept the rate at 2.5 percent, according to a statement on the PBOC's website. It replaces CNY481 billion worth that expired today.

The PBOC also injected CNY13 billion (USD1.8 billion) in seven-day reverse-repos into the economy today, CNY3 billion more than the amount that matured, but kept the interest at 1.8 percent. This meant that CNY91 billion (USD12.6 billion) worth of funds flowed out of the banking system today.

The reduction in MLF loans is in line with market expectations, an industry insider told Yicai. The central bank took steps to ensure that liquidity remains reasonably ample by lowering the reverse requirement ratio by 0.5 percentage point to an average of 7 percent on Feb. 5, infusing CNY1 trillion (USD139 billion) into the market.

The fact that the MLF interest rate remained the same this month indicates an overall balance of supply and demand in the banking system’s cash flow, an analyst said. With the use of more monetary policies, interest rates should stay stable from now on in order to keep the exchange rate steady, the analyst said.

The benchmark five-year loan prime rate, to which bank loans are attached, was lowered by a more-than-expected 25 basis points on Feb. 20 to 3.95 percent, but the one-year LPR remained the same at 3.45 percent.

Editors: Dou Shicong, Kim Taylor