China's central bank keeps medium-term loan rate unchanged amid yuan weakness

China on Monday kept its medium-term lending rate steady, as the country's central bank seeks to stabilize the yuan which has come under pressure following Donald Trump's victory in the U.S. presidential election.

The People's Bank of China kept the medium-term lending facility rate unchanged at 2.0% on 900 billion yuan ($124.26 billion) worth of one-year loans to some financial institutions, according to the bank's official statement.

"It is a well-expected move, given that the market liquidity [has] remained ample," said Bruce Pang, chief economist and head of Research, Greater China at JLL, citing PBOC's move in October that injected 500 billion yuan into the banking system.

Keeping the MLF rate intact allows for "greater policy maneuverability" given the change in U.S. administration, at a time when commercial banks' net-interest-margins have remained tight, Pang added.

At the end of September, overall commercial bank margins dropped to 1.53%, according to official data from the national financial regulatory administration. That's far below the 1.8% threshold that regulators see as necessary to maintain "reasonable profitability."

The bid rates in Monday's operation ranged from 1.90% to 2.30%, with the total MLF loans now standing at 6.239 trillion yuan, according to the central bank's statement.

Wang Tao, chief China economist at UBS Investment Bank, estimates the MLF to remain at 2.0% this year before coming down to 1.2% at the end of 2025, and 1.0% in 2026.

Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, expects the PBOC to hold off more rate cuts until the new U.S. administration takes office in January, which is expected to bring higher tariffs on Chinese exports. 

"The strong appreciation of