SHANGHAI: The yuan held steady against the US dollar on Friday after China’s central bank left a key policy rate unchanged, preventing the yield gap from widening further

As expected, the People’s Bank of China (PBOC) said it was keeping the rate on the one-year medium-term lending facility (MLF) loans to some financial institutions unchanged at 2.50% from the previous operation.

While analysts believe much more stimulus is needed to get the struggling economy back on its feet, cutting rates before a widely expected move by the Federal Reserve would widen yield differentials, potentially putting more pressure on the yuan, which has depreciated 1.3% against the dollar so far this year.

China’s 10-year treasury bond yield dropped 2 basis points after the MLF decision, despite the rate being kept unchanged.