PBoC Holds 1-Year MLF Rate at 2.3%

The People’s Bank of China (PBoC) launched a CNY 300 billion via a one-year medium-term lending facility (MLF) to the financial institutions on August 26 while keeping the interest rate unchanged at 2.3% after slashing it by 20bps in July.

Monday's operation was delayed from its typical schedule in the middle of every month, part of the central bank’s plan to overhaul its policy rate system that gradually reduces the role of MLF rate and turns to using the short-term rate to guide markets like its global peers.

With CNY 401 billion worth of MLF loans expiring on August 15, the central bank drained a net CNY 101 billion of cash from the banking system.

The PBoC also injected CNY 471 billion through seven-day reverse repurchase operations, maintaining the seven-day interest rate at 1.7%.