The People’s Bank of China Maintains Liquidity with 995 Billion Yuan MLF Operation
The People’s Bank of China recently launched a 995 billion yuan medium-term lending facility (MLF) operation in an effort to maintain reasonable and sufficient liquidity in the banking system. The winning bid rates for the MLF operation were reported to be the same as the previous time, indicating stability in the market.
In addition to the MLF operation, the central bank also held an 89 billion yuan open market reverse repurchase operation on January 15, fully meeting the needs of financial institutions. The MLF operation has a period of one year, with a winning interest rate of 2.5%, while the reverse repurchase operation has a period of 7 days and a winning interest rate of 1.8%. The winning bid rates for both operations remained unchanged from the previous time.
According to a screenshot of the official website of the People’s Bank of China, the recent MLF operation was an incremental renewal, with a net investment of 216 billion yuan, as 779 billion yuan of MLF operations expired that month. Dong Ximiao, chief researcher of China Merchants Union, commented on the recent acceleration of government bond issuance and the extension of credit at the beginning of the year, indicating a potential impact on market liquidity. The incremental MLF operations carried out by the People’s Bank of China were seen as a measure to maintain reasonable and sufficient market liquidity, ensuring the smooth operation of the financial market at the beginning of the new year.
The MLF operations and other measures by the People’s Bank of China come amid efforts to stabilize the economy and support financial institutions, as authorities continue to monitor and respond to changing market conditions. (Reporter Zhang Qianqian)