(Yicai) Oct. 25 -- China's central bank has conducted this month's medium-term lending facility operation at the same rate as in September.

The People's Bank of China today released CNY700 billion (USD98.3 billion) worth of funds into the financial system via one-year MLF operations at an interest rate of 2 percent, with bidding rates ranging from 1.9 percent to 2.3 percent.

The MLF rate remained unchanged because the PBOC already lowered it by 30 basis points on Sept. 25, the day after announcing a loan prime rate cut, said Wang Qing, chief macroeconomic analyst at credit rating agency Golden Credit Rating International. This means that October's MLF fell to a level close to the yield to maturity of interbank certificates of deposit, he added.

The size of this month's MLF operations was large to keep reasonable and ample liquidity in the banking system, Wang noted.

The October MLF operations and large banks' capital supplement arrangement will support commercial lenders in increasing credit issuance in the fourth quarter, with the size of newly-added bank loans expected to return to growth from this month, according to Wang.

About CNY1.45 trillion (USD203.6 billion) worth of MLF loans will expire in both November and December, so the PBOC will likely continue to conduct large MLF operations, Wang predicted. The fourth quarter is a peak period for government bond issuance, so banks are expected to increase their credit release efforts.

The PBOC also conducted CNY292.6 billion of seven-day reverse repurchase operations at a fixed interest rate of 1.5 percent today to replace CNY108.4 billion of lending that expires this month.

Today's joint operations showed that the central bank aims to keep market liquidity reasonably ample through the flexible use of different tools, Zhou Maohua, a macroeconomic researcher at China Everbright Bank's financial department, told Yicai. This is helpful to stabilize market expectations, he added.

Some CNY789 billion of MLF matured on Oct. 16, the largest amount since the beginning of this year. On that day, the PBOC carried out CNY642.4 billion worth of seven-day reverse repo operations. The central bank also conducted CNY792.7 billion and CNY798.9 billion of seven-day reverse repo operations on Oct. 23 and Oct. 24, respectively, to offset other factors, such as maturity and taxation period.

There is a chance that the PBOC will further cut the reserve requirement ratio by 25 basis points to 50 basis points later this year, Governor Pan Gongsheng said on Sept. 24.

Editors: Liao Shumin, Futura Costaglione