China Holds 1-Year MLF Rate Steady at 2.5%

The People’s Bank of China (PBoC) launched a total of CNY 182 billion via a one-year medium-term lending facility (MLF) to the financial institutions while maintaining the interest rate at 2.50% as expected on June 17th, amid abundant liquidity and the central bank's ongoing efforts to stabilize the yuan.

Last week, the onshore yuan fell to its lowest level since November, pressured by a wide US-China rate gap.

With CNY 237 billion worth of MLF loans set to expire this month, the central bank drained a net CNY 55 billion of cash from the banking system.

Meanwhile, China's economy has undergone a patch recovery: May exports exceeded expectations, inflation rose less than expected, but factory activity unexpectedly contracted last month.

The PBoC also injected 4 billion yuan through seven-day reverse repurchase operations and kept the seven day interest rate steady at 1.8%.