SHANGHAISINGAPORE, March 15 Reuters China39;s central bank left a key policy rate unchanged while withdrawing cash from a mediumterm policy loan operation on Friday, as authorities continued to prioritise currency stability amid uncertainty over the timing of expected Federal Reserve interest rate cuts.

The Fed39;s historic monetary tightening has bolstered the dollar and pressured the yuan over the past few years. Cutting rates before a move by the Fed or other major central banks would widen yield differentials, potentially putting more pressure on the local currency.

The People39;s Bank of China PBOC said it was keeping the rate on 387 billion yuan 53.80 billion worth of oneyear mediumterm lending facility MLF loans to some financial institutions unchanged at 2.50 from the previous operation.

With 481 billion yuan worth of MLF loans set to expire this month, the operation resulted in a net 94 billion yuan fund withdrawal from the banking system. It marked the first cash withdrawal through the liquidity instrument since November 2022.

The central bank said the Friday39;s loan operation has fully met financial institutions39; demand to maintain banking system liquidity reasonably ample, according to an online statement.

Net cash withdrawal is an obvious signal, echoing the content of the government work report on preventing idling of funds, said Xing Zhaopeng, senior China strategist at ANZ.

Given major commercial banks have not yet lowered deposit rates again,…