The People’s Bank of China opted to keep its one-year policy loan interest rate at 2.5% on Monday while injecting funds into the financial system

Asian shares were mostly higher on Monday, with Tokyo extending its New Year rally, as China’s central bank (People’s Bank of China) kept its one-year policy loan interest rate unchanged.

U.S. futures and oil prices rose.

The People’s Bank of China opted to keep its one-year policy loan interest rate at 2.5% on Monday while injecting funds into the financial system. That surprised market observers since it was contrary to the expected trend of reducing borrowing costs to stimulate the economy.

The policy focus has shifted to the effectiveness of monetary policy, Zhaopeng Xing and Raymond Yeung of ANZ said in a report. Today’s hold means the chance of an RRR (reserve ratio requirement) reduction in February is higher.

The Hang Seng in Hong Kong slipped 0.2% to 16,219.55, while the Shanghai Composite index was up 0.4%, at 2,892.28.

Search engine provider Baidu plunged 8.6% after a local newspaper report alleged the firm’s Ernie AI platform was linked to Chinese military research into AI. Baidu said in a statement that it “has no affiliation or other partnership with the academic institution in question.”

Tokyo’s Nikkei 225 advanced 1.1% to 35,955.00 and the Kospi in South Korea inched up 0.1% to 2,526.72.

Ruling-party candidate Lai Ching-te emerged victorious in Taiwan’s presidential election on Saturday, a result that will determine the course of the self-ruled democracy’s strenuous relations with China over the next four years. The Democratic Progressive Party, to which Lai belongs, has consistently denied China’s assertions of sovereignty over Taiwan.

Taiwan’s Taiex added 0.5% to 17,604.72.

Australia’s S&P/ASX 200 also inched up 0.1%, to 7,502.70.

On Friday, the S&P 500 inched up 0.1%, the Dow Jones Industrial Average declined 0.3%, dragged down by a sharp loss for UnitedHealth Group after its results. The Nasdaq was basically flat and increased by less than 0.1%.