China holds MLF rate steady, injects $126 bn liquidity

China’s central bank has carried out a ¥900 billion (~$126 billion) medium-term lending facility (MLF) operation to ensure reasonable and ample liquidity across the banking system.

The one-year facility was priced at an unchanged two per cent, matching the rate applied in last month’s MLF issuance, according to the People’s Bank of China (PBoC).

Following the latest operation, outstanding MLF funds rose to ¥6.239 trillion. The move comes ahead of a heavy maturity schedule, with about ¥1.45 trillion (~$873.46 billion) of MLF funds due this month. Analysts said the injection offsets the liquidity pressure created by these upcoming maturities and supports stable funding conditions for banks.

The central bank also had earlier boosted liquidity through other channels. In October, it conducted ¥500 billion of outright reverse repos, which analysts described as a pre-release of medium-term liquidity.

"The MLF rate follows market trends and fluctuates in sync with market interest rates. Recently, policy interest rates and the loan prime rate, a market-based benchmark lending rate, have remained stable, hence the MLF rate also remains unchanged this month," said Wang Qing, chief macro analyst at Golden Credit Rating.

ALCHEMPro News Desk (HU)