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E-mail Xinhua, March 25, 2025
The People's Bank of China, the central bank, on Tuesday conducted a 450-billion-yuan (about 62.68 billion U.S. dollars) one-year medium-term lending facility (MLF) operation to maintain ample liquidity in the country's banking system.
With 387 billion yuan in MLF funds maturing this month, the move resulted in a net liquidity injection of 63 billion yuan. It is the first net injection through MLF since July 2024.
The operation indicates a moderately loose monetary policy stance, said Wen Bin, chief economist at China Minsheng Bank. Since the beginning of this year, the central bank has employed various tools to inject liquidity, helping to maintain adequate liquidity and stable interest rates.
Starting this month, the central bank has adopted a multiple-price bidding method for MLF operations. As a result, it no longer announces a fixed interest rate for the facility.
The shift to a multiple-price bidding method for MLF operations is seen as a further step in phasing out the MLF rate's role as a policy signal, experts said.
Over the past year, the central bank has clarified that the seven-day reverse repo rate is the main policy rate, gradually de-emphasizing the policy intention of other tools.
Wen noted that the adoption of multiple-price bidding is expected to lower the overall cost of MLF funding. The move will enhance the market-based pricing capabilities of institutions and support the sustainable financing for the real economy.
