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PBOC 1 year MLF at an unchanged rate of 2.75% | Forexlive

PBOC 1 year MLF at an unchanged rate of 2.75% | Forexlive

People's Bank of China inject 125bn yuan via a one-year MLF at an unchanged rate of 2.75%

100bn yuan of MLF are maturing today

thus net MLF injection is 25bn yuan

From earlier, ICYMI, on the PBOC's Medium-term Lending Facility (MLF).

The MLF rate is a benchmark interest rate that banks in China can use to borrow funds from the People's Bank of China for a period of 6 months to 1 year, medium-term liquidity to commercial banks.

The rate is typically announced on the 15th of each month.

The interest rate on the MLF loans is typically higher than the benchmark lending rate (more on these below), which encourages banks to use the facility only when they face a shortage of funds.

The MLF rate sets the scene for the monthly Loan Prime Rate (LPR) setting on the 20th.

The MLF rate was unchanged in February at 2.75%, as were the LPRs:

3.65% for the one year

4.30% for the five year

MLF loans are secured by collateral, which can be a wide range of assets including bonds, stocks, and other financial instruments. The collateral ensures that the PBOC can recover the funds if the borrower defaults on the loan.

Source : https://www.forexlive.com/centralbank/pboc-1-year-mlf-at-an-unchanged-rate-of-275-20230515/

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