The People’s Bank of China kept the 1-year MLF interest rate unchanged at 2.5%, as expected.
Injects 100 billion yuan via one-year MLF
- 170 billion yuan expected on Wednesday
- net leakage of 70 billion yuan in MLF
–
What is FML?
The PBOC MLF rate is a benchmark interest rate that Chinese banks can use to borrow funds from the People’s Bank of China for a period of 6 months to 1 year, as medium-term liquidity for commercial banks .
- The price is generally announced on the 15th of each month.
- The interest rate on MLF loans is generally higher than the benchmark rate (more on this below), which encourages banks to use this facility only when faced with a shortage of funds.
- MLF loans are secured by collateral, which can be a wide range of assets, including bonds, stocks and other financial instruments. The guarantee ensures that the PBOC can recover the funds if the borrower fails to repay the loan.
The MLF rate sets the stage for the monthly adjustment of the prime loan rate (LPR) in the market. 20 The 21st, because the usual 20th is a Sunday. The current LPR rates are:
- 3.45% for one year
- 3.95% for five years
PBdC
cnbctv18-forexlive
