The People’s Bank of China (PBOC) said on its website that it was lowering the rate on one-year MLF loans by 5 basis points (bps) to 3.25% from 3.30% previously.

The PBOC said it had injected 400 billion yuan (US$56.92 billion) into financial institutions via the liquidity tool, slightly less than a batch of MLF loans worth 403.5 billion yuan due to mature today.

The PBOC’s decision to trim medium-term borrowing costs comes after it surprised markets by not issuing targeted medium-term loans in October, adding to uncertainty over how policymakers plan to stabilise the slowing economy.

In a note late last week, analysts at Nomura said they maintained their forecast that China’s real GDP growth would slow to 5.8% in the fourth quarter, leading to greater market volatility.

“Beijing will likely introduce more policy easing measures in coming quarters to stabilise market sentiment and bolster growth, but the space is much more limited than in previous easing cycles, especially with surging CPI inflation,” they said.

China’s economic growth slowed to a near 30-year low of 6.0% in the third quarter, weighed down by weak domestic and global demand and the prolonged Sino-US trade war.

But market participants have widely believed that the PBOC’s room for monetary easing has been constrained by worries about rising debt risks, and a recent jump in consumer inflation to near 6-year highs, though the latter has been driven largely by rising pork prices.

The central bank also unexpectedly kept its new lending benchmark rate unchanged at its monthly fixing in October for the first time since its debut. It had trimmed the rate in August and September.

The new Loan Prime Rate (LPR) is linked to the MLF rate, which is determined by broader financial system demand for central bank liquidity.

The PBOC also said it would not conduct its regular open market operations today. No reverse repurchase agreements were set to mature on the day.