(Bloomberg) -- China added liquidity to the financial system Wednesday, helping to offset a cash squeeze ahead of the Lunar New Year holiday. It kept interest rates on the loans unchanged.

The People’s Bank of China added 300 billion yuan ($44 billion) through the medium-term lending facility at 3.25%, according to a statement from the central bank Wednesday. It also injected 100 billion yuan via open market operations after a 15-day hiatus, selling 14-day reverse repurchase agreements at 2.65%.

There were no funds maturing Wednesday. Some 257.5 billion yuan worth of targeted medium-term loans will come due on Jan. 23.

Analysts estimate a 3.8 trillion yuan liquidity gap may need offsetting in January as Chinese companies and residents withdraw cash ahead of the week-long holiday. Banks also have to build cash levels for tax payments and reserve requirements, among other needs. Authorities have signaled they will continue to reduce borrowing costs for companies in 2020 in part of a broader government drive to stabilize economic growth, even though signs of a recovery have emerged.

The injection comes after the central bank earlier this month lowered the amount of cash banks must keep in reserve, unleashing about 800 billion yuan into the financial system. It had also lowered the cost of the key one-year funding facility in November. The measures are expected to help with this year’s earlier-than-usual sale of local government debt, which is largely used to finance infrastructure construction. Banks are the main buyers of the bonds.

To contact Bloomberg News staff for this story: Livia Yap in Shanghai at lyap14@bloomberg.net;Yinan Zhao in Beijing at yzhao300@bloomberg.net

To contact the editors responsible for this story: Sofia Horta e Costa at shortaecosta@bloomberg.net, Fran Wang

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